So much of the quibbling about paper-trading stems from misunderstanding just what it is that paper trading is supposed to do. If one expects something else, he's going to be disappointed. And, of course, there's always the problem of not doing it right.
Paper trading has nothing to do with emotion. To think that paper trading is in any way going to simulate the emotional response that one feels when he is trading with real money is, at best, naive, and to state that it is pointless because it does not spark these emotions is unfair.
There are two chief reasons why one might want to paper trade. One has to do with getting used to the feel of trading itself, i.e., creating the order, transmitting the order, managing the trade, getting used to the platform and where everything is, hitting the wrong key, fixing it, and so on.
The other has to do with determining whether or not one's method or system or approach or strategy or whatever you want to call it is profitable, at least in simulated trading. That it turns out to be profitable does not necessarily mean that one will trade it profitably for real. Nor does it mean that it is in fact profitable, particularly if one isn't paper-trading correctly. However, it is a sure bet that if the strategy isn't profitable in paper trading, it sure as hell isn't going to be profitable if one trades it for real.
Additionally, if PT isn't done correctly, it is largely a waste of time. PT is the end of a series of steps which include studying the charts, defining the setup, backtesting the setup either manually or automatically, "forward" testing the setup using old charts, then, finally, PT the setup in real time, using the same new data that everybody else is receiving and trading. It is also critical that a trading journal be kept throughout so that one can deal with glitches, anomalies, and address whatever emotional responses may manifest themselves. And one must be careful not to play games with himself, recording a trade seconds or even minutes after the trade is resolved, thinking Oh, yeah, I would have taken that, or Oh, no, I wouldn't have taken that. If one is going to PT, he needs to make whatever decision needs to be made AT THE TIME, not five or ten seconds later. Your broker won't be giving your money back if you have an oops. Therefore, take it or don't take it, but make up your mind, recording why you took it or didn't take it, then recording why you think it did or didn't work out. Only by doing so can one improve the plan and avoid most if not all of the emotional murk that one wades through because he didn't plan sufficiently or PT that plan.
