A paper trading account validates your pipeline before real money is at risk. Most automated strategies that fail in production don't fail because the signals were wrong — they fail because no one verified the configuration worked before going live.
Paper trading account best practices start with configuration
Most paper mode setups fail before the first signal fires. You create the Alpaca paper account, connect it to VelaDeck, and assume everything is active. Three things need to be true before you see any planned orders.
- Your Alpaca account is connected — OAuth or API keys in Settings. Without a connection, fills can't be tracked.
- Live trading is off. The toggle is in Settings. If you never touched it, it's already off — VelaDeck defaults to paper for every user.
- Notional is set. A strategy with no assigned USD generates no orders.
Start with a notional that matches what you plan to commit live. Then visit [/strategies](/strategies) to understand each strategy's holding count and rebalance cadence before assigning capital.
What planned orders tell you about pipeline health
The first planned orders appear after the next composition diff. For monthly strategies that's the next monthly rebalance. Check each planned order for three things.
Direction should match what you expect: BUY for a new entrant, SELL for a name the strategy dropped, REWEIGHT for a name that stayed but changed weight. Unexpected directions usually mean the strategy assignment is pointing at the wrong composition.
Notional should equal your total allocation divided by the number of holdings. A $2,000 allocation to a 20-name strategy should produce $100 BUYs. If the math is off, recheck your notional setting.
Status should show 'planned' for new orders. Watch for 'skipped_over_cap' if you set a monthly cap — it means the cap is binding and some signals didn't execute. That's useful to see before you go live.
Verify fills before trusting the P/L numbers
Planned orders and fills are different things. A planned order is generated the moment VelaDeck detects a signal. A fill is Alpaca confirming the order executed with a price and quantity. In paper mode, Alpaca simulates fills using market prices — they land quickly, but they're not guaranteed at any specific price.
Check that filled_avg_price and filled_qty appear on each order after execution. If an order stays in 'sent' but never shows a fill, the Alpaca connection may have an issue worth resolving in paper mode rather than discovering mid-live.
The P/L tracking on the dashboard uses fill prices, not planned-order prices. Two paper cycles of verified fills means your P/L numbers reflect actual execution quality, not hypothetical entry points. That's the baseline you bring into live trading.
How long to stay in paper mode before switching to live
Two rebalance cycles is a reasonable minimum for monthly strategies. That gives you one cycle to inspect signal quality and one to verify the numbers are consistent. For WB15 — the one quarterly strategy in the catalog — two cycles means six months, though one clean cycle is often enough given the lower turnover.
The question to answer before going live isn't 'do I trust the strategy.' It's 'do I trust the pipeline.' VelaDeck is not an investment advisor and makes no forecast about returns. Historical performance of any strategy is not a promise of future results. The paper period is your chance to verify that signals fire correctly, orders size as intended, and fills land where they should.
For a step-by-step checklist, see the [paper to live trading guide](/blog/paper-to-live-trading-safely).
Setting notional and monthly caps during paper mode
Paper mode is the right time to calibrate these numbers — not after you've committed real capital.
A monthly cap set too high deploys more than you intended during active rebalance months. Too low and signals stack up as 'skipped_over_cap' without executing. A common starting approach: set the cap at 20–30% of your total notional. For a 20-name strategy, a full rebalance deploys roughly one-twentieth of notional per BUY signal. Some months have more turnover than others, so a conservative cap limits exposure during higher-activity months while you learn the rhythm.
After each rebalance, check the 'skipped_over_cap' count. If it's consistently zero, the cap isn't binding. If it's cutting off 30–40% of signals regularly, decide whether that constraint was intentional. VelaDeck doesn't custody your funds — they stay in your own Alpaca account — so adjusting the cap only affects future order submissions.
Three paper trading mistakes that cost you when you go live
Not reconciling positions after a ledger reset. If you reset your Alpaca paper account mid-observation, VelaDeck's order ledger gets out of sync with your actual paper holdings. SELL signals can then fire against positions that no longer exist. Run the sync tool explicitly after any reset to rebuild the planned position from the current strategy composition.
Treating paper mode as a backtest. A backtest simulates historical data with hindsight. Paper mode simulates future execution with real-time signals. The VelaDeck backtest shows what $1,000 in your allocation mix would have done historically — it's a simulation, not a prediction. Paper mode tests whether your live configuration is correct. Confusing the two leads to misplaced confidence going into live trading.
Skipping notification setup. VelaDeck sends per-signal WhatsApp notifications. In paper mode each notification includes the planned order details. Set it up in Settings before your first rebalance so paper mode trains you on the exact workflow you'll rely on live. If you skip it now, you won't know a signal fired until you manually check the dashboard.
If you haven't connected an Alpaca account yet, [create your VelaDeck account](/signup) and start in paper mode.
What is a paper trading account?
A paper trading account simulates trades without using real money. Alpaca provides a fully-functional paper environment where orders go through the same execution path as live trades but against a separate balance. VelaDeck connects to whichever environment you provide — paper or live — via OAuth or API keys. Switching between them is done in Settings.
How long should I stay in paper mode?
At minimum, two full rebalance cycles for monthly strategies — roughly two months. One cycle may be enough for quarterly strategies if the first one looks clean. The goal is validating that signals fire, orders size correctly, fills land, and your cap behaves as intended. It's not a performance evaluation window.
Can I switch from paper to live without missing any signals?
Yes. The pipeline generates signals the same way in both modes. When you flip the live toggle in Settings, subsequent planned orders get submitted to your Alpaca live account. Orders already in 'planned' status during paper mode stay in that state — they don't get resubmitted automatically. If you want to build a live position from scratch, run the sync tool after enabling live trading. See [how monthly rebalancing works](/blog/how-monthly-rebalancing-works) for the full signal lifecycle.
What happens if I reset my Alpaca paper account?
VelaDeck's order ledger stays intact — it doesn't know you reset the Alpaca side. This creates a mismatch: VelaDeck thinks you hold positions that no longer exist in Alpaca. The next SELL signal may fail because Alpaca has no shares to sell. Run the sync tool after any reset to bring the ledger back in line with the current strategy composition.
Is paper mode performance a reliable indicator of live results?
Paper mode tells you whether the pipeline works correctly — signals fire, orders size as configured, fills come back with prices. It doesn't tell you what returns to expect. A clean paper period means your configuration is right. It says nothing about future portfolio performance. VelaDeck does not give investment advice, and past or simulated performance is not a forecast of future results.