Paper Trading Execution Worksheet.
Study price quotes, order instructions, trading costs and risk using fictional scenarios. No live transactions, trading signals, or brokerage accounts required.
Know what the quote tells you.
Bid–ask spreads are important components of potential execution cost. Quotes may change or disappear, and the last transaction price does not guarantee a new order’s fill.
| Fictional scenario | Bid | Ask | Displayed spread |
|---|---|---|---|
| Market A | $24.95 | $25.05 | $0.10 |
| Market B | $49.90 | $50.10 | $0.20 |
| Your paper example | ________ | ________ | ________ |
Practice: Calculate spread as ask minus bid. Divide by the midpoint (bid + ask) ÷ 2 for a rough percentage comparison. A displayed spread alone is not a guarantee of the total trading cost.
Execution priority versus price control.
| Order | Price behavior | Main uncertainty |
|---|---|---|
| Market order | Seeks execution at available prices | Final price not guaranteed |
| Limit order | Sets maximum buy / minimum sell price | Partial or no execution |
| Stop-market order | May become a market order when triggered | Actual fill may be far from stop |
| Stop-limit order | May become a limit order when triggered | May remain unfilled after a gap |
Paper scenario: A hypothetical security closes at $40 and next trades at $34. Explain why neither a sell stop at $38 nor a $38-trigger/$37-limit stop-limit order guarantees a sale at $38.
One order can fill at multiple prices.
A fictional purchase of 100 shares fills 40 at $20.00, 40 at $20.05, and 20 at $20.15. Its weighted-average fill price is $20.05: (40 × $20.00 + 40 × $20.05 + 20 × $20.15) ÷ 100. Relative to an anticipated $20.00, the hypothetical difference is $0.05 per share, or $5 before other costs.
Try another exercise: Calculate the average price for 25 shares at $30.00 and 75 shares at $30.20. Identify why partial fills and changing quotes matter.
What is missing from the example? Commissions, exchange fees where relevant, price movement, borrowing costs and any instrument-specific constraints.
Write the reasoning before the outcome.
Pre-event record
Date and hypothetical market: ____________________
Instrument structure: ____________________
Source and quote time: ____________________
Hypothesis: ____________________
Order type and why: ____________________
Assumed bid–ask spread: ____________________
Review and stress test
Potential slippage: ____________________
Adverse price-gap scenario: ____________________
Liquidity or halt risks: ____________________
What would invalidate the hypothesis? ____________________
Alternative explanation: ____________________
What did I learn? ____________________
Practice decisions. Respect uncertainty.
Combine the worksheet with Trading Execution Lab and Risk Management Lab. A simulated outcome is not proof of real-world trading results.
General education only. Fictional prices and scenarios are not investment recommendations, trading signals, promises, or personalized advice. Actual orders can fill at unexpected prices or not fill at all, and trading can cause substantial losses. Read disclosures.