Paper Mode Testing

Paper Mode Testing

Paper mode is Gridera’s built-in simulation environment. It runs your grid bot against live market data without placing real orders or risking any capital. Think of it as a practice round that uses real prices but fake money.

How to Enable Paper Mode

Enabling paper mode requires a single configuration change. In your bot’s YAML configuration file, set the dry run flag:

execution:
  dry_run: true

That is it. Every other setting in your configuration stays the same. The bot will start normally, connect to real price feeds, and run its full trading cycle. The only difference is that order placement goes through the simulation engine instead of the real exchange.

You can also enable paper mode through the dashboard when creating or editing a bot configuration. Toggle the “Paper Mode” or “Dry Run” switch to on.

What Gets Simulated

Paper mode simulates the complete trading lifecycle:

Order placement: When the bot decides to place a buy order, the simulation records it as a virtual pending order. No real order reaches the exchange.

Order fills: When the real market price reaches your virtual order’s price, the simulation marks it as filled. A buy at $95 fills when the real market price touches or drops below $95.

Take-profit orders: After a simulated buy fills, the bot places a simulated TP sell order at the next grid level. This fills when the real price rises to that level.

Position tracking: The simulation maintains a virtual account with tracked positions, margin usage, and available balance. These update with each simulated fill.

PnL calculation: Realized profit from completed round trips and unrealized PnL from open positions are calculated using real market prices, giving you accurate performance metrics.

What Is Not Simulated

Some real-world factors are not captured in paper mode:

Trading fees: The simulation may not apply the exact same fee structure as the live exchange. Always account for fees when evaluating paper mode results.

Slippage: In real markets, your order may fill at a slightly different price than specified, especially during fast moves. Paper mode fills at exactly the order price.

Order book depth: Real orders compete with other traders for fills. Paper mode assumes your order always fills when the price condition is met, regardless of available liquidity.

Funding rates: Perpetual futures charge funding every 8 hours. Paper mode does not deduct these costs from your virtual balance.

What to Watch For

During your paper mode testing period, pay attention to these indicators:

Trade frequency: How many buy-sell round trips complete per day? If the answer is zero or one over several days, your grid spacing may be too wide or the price may not be oscillating within your range.

PnL trajectory: Is the profit line trending upward? Flat or declining PnL suggests the configuration is not capturing enough spread per trade to be profitable.

Grid utilization: How many of your grid levels have been touched? If only the top 3-4 levels see action, the lower levels are not contributing. Consider tightening your range or adjusting the grid low.

Grid break events: Did the price exit your range during testing? If yes, note when and why. You may need a wider range or different grid break settings.

Maximum drawdown: What was the deepest unrealized loss during the test? This tells you the worst-case scenario you should be prepared for when going live.

Recommended Testing Duration

Run paper mode for a minimum of 3-5 days. This duration should expose your configuration to:

• At least one significant price move (5%+ daily change).
• Multiple complete oscillation cycles within your grid.
• Different trading sessions (weekday vs weekend activity levels).
• Enough trades to judge frequency and profitability statistically.

If the market was unusually calm or unusually volatile during your test period, consider extending the test or running a second test period to get a more representative sample.

Evaluating Results

After your test period, review the following:

Total net profit: Subtract estimated fees (round-trip fee x number of completed trades) from the reported profit. Is the result still positive and meaningful?

Risk-reward ratio: Divide your maximum drawdown by total profit. A ratio below 2 is good. Above 5 means the risk may not justify the return.

Annualized return: Extrapolate your daily or weekly return to an annual figure. Does it meet your expectations? Remember that paper mode results tend to be 10-20% higher than live results.

Consistency: Were profits distributed evenly over the test period, or did one big day account for most of the gains? Consistent daily profits indicate a robust configuration.

Making Adjustments

If paper mode results are not satisfactory, adjust one parameter at a time and retest:

• Low trade frequency: Tighten the range or add more grid levels.
• Low profit per trade: Widen the spacing between levels.
• Frequent grid breaks: Widen the range or add more buffer.
• Large drawdowns: Reduce leverage or order size.

Changing multiple parameters simultaneously makes it impossible to know which change had which effect. Adjust one, test for 2-3 days, evaluate, and repeat.

Summary

• Paper mode runs your bot with real prices and simulated orders by setting dry_run: true in your configuration.
• It simulates order placement, fills, positions, and PnL but does not capture slippage, funding rates, or order book competition.
• Test for 3-5 days minimum, then adjust one parameter at a time if results are not satisfactory.

Next Step

Learn how to read and use the dashboard in Dashboard Usage.