What is paper trading? A safe way for kids and teens to practice investing
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Key takeaways
What is paper trading?
Paper trading is simulated investing. Instead of using real money, you buy and sell stocks or ETFs with virtual funds, then track how your investments perform in the real market.
The term paper trading comes from the old-school days when traders would actually write hypothetical trades down on paper to see how they would have performed. Today, it happens digitally — like the new Greenlight's paper trading dashboard, which makes investing education interactive.
Even though the money isn’t real, the stock market data is. Prices move in real time, and the gains and losses reflect what would have happened if you invested actual dollars. That makes paper trading a realistic way to practice and learn, but without any financial risk.
For families, it’s a chance to gain experience and learn the ropes without investing real money until you’re ready.
Why do paper trading?
Learn about the stock market without risk
Real investing involves uncertainty. Markets move up and down, and learning how to navigate those changes is part of becoming a confident investor.
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Paper trading creates a safe environment where kids and teens can:
Try their first stock purchase
Experience market ups and downs
Learn what diversification means
Make mistakes — and learn from them
When the stakes are purely educational, the focus stays on building knowledge instead of worrying about loss.
Build investing confidence first
Beyond learning the basics, paper trading gives young investors something invaluable: confidence.
The first time you invest real money can feel intimidating. What if the stock drops? What if you pick the “wrong” company? That hesitation can stop beginners before they even start.
Paper trading lowers the emotional stakes. Kids and teens can:
Learn how to place a trade
Watch how a portfolio moves day to day
Get familiar with investing terms
See how long-term strategies play out
The more comfortable they become with the process, the less intimidating real investing feels later. Confidence that comes from practice often leads to smarter, calmer decisions when actual money is involved.
Practice stock market research
Successful investing isn’t guessing. It’s thinking long-term, researching companies, and making intentional decisions.
With paper trading, kids can gain firsthand experience with questions like:
What happens if I invest in one company vs. several?
How does news affect stock prices?
What if I hold long-term instead of trying to trade quickly?
They start connecting actions to outcomes — a skill that translates directly into real-life investing later.
When your family is ready to start, Greenlight’s investing tools simplify research so kids and teens can understand risk tolerance and think about long-term goals. Learn more in our parents' guide to investing.
Paper trading vs. real investing reality check
While paper trading is impactful, it’s not identical to real investing. Here are a few things to keep in mind.
Know the emotional difference
When real money is on the line, emotions are stronger. Fear and excitement can influence decisions to buy or sell in ways that simulation doesn’t fully replicate.
That’s why paper trading is best viewed as practice, not a guarantee of future performance.
Recognize it’s only a starting point
Paper trading builds foundational skills. But eventually, transitioning to real investing introduces new lessons about responsibility and financial discipline. For example, real money doesn’t come free like virtual money!
It also introduces kids and teens to the habit of saving, since investing real dollars means earning and setting money aside on purpose. That means:
Learning to save consistently
Setting goals for future investing
Understanding the difference between spending and building wealth
Practicing patience while money grows
Saving becomes the bridge between practice and real investing. When kids move from virtual portfolios to real ones, they better understand that every dollar invested represents time, effort, and choice.
Focus on the long-term
Many aspiring investors use paper trading as a precursor to active trading, with a goal to buy and sell more frequently and profit from short-term price changes. It sounds exciting, but the reality of day trading is notoriously risky — and a vast majority of people who try it lose money.
With long-term investing, the goal is to let compounding work over time to grow wealth steadily. These investors take a balanced, “buy and hold” approach, looking at investments in years instead of days.
Paper trading can help reinforce this mindset early — showing kids that patience actually pays.
Where can you do paper trading for free?
With Greenlight paper trading, kids and teens can practice investing in a hands-on, interactive way — at no cost. They can research a stock and learn about a company through short, easy-to-understand videos, place simulated trades, and even have AI grade a stock based on its fundamentals.
There’s also a leaderboard to track performance and friendly competition, plus the ability to create groups and compete with friends. It turns investing education into an engaging experience — while still reinforcing smart decision-making and long-term thinking.
From practice to real investing: Start smart with Greenlight
More families are prioritizing financial literacy, and younger generations are increasingly curious about investing. Stock simulators and digital investing tools have made learning accessible, interactive, and even fun. For parents, that means investing education doesn’t have to wait until adulthood. If your family is ready to explore investing in a safe, hands-on way, offers a simple place to start building skills and confidence.
And when your child is ready to move beyond practice, Greenlight’s real investing tools make it easy to put those lessons into action — with parental oversight and built-in guardrails. You can invest with as little as $1, thanks to fractional shares!
Start with practice. Build confidence. And take advantage of the one thing young investors have that no one else does — time.
This blog post is provided "as is" and should not be relied upon as a substitute for professional advice. Some content in this post may have been created using artificial intelligence; however, every blog post is reviewed by at least two human editors.
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