The reason we paper trade in our world is to make sure we understand the process and we can execute it seamlessly and mistake-free. It’s not to prove whether or not the system is profitable because we could paper trade for a couple of weeks,  months, or years and still not have a sense of what the long-term performance of one system will be. Because if we paper trade through a bear market and it’s a long side system, it will not look great.

We’ve got to have this important distinction as systematic traders. We learn to backtest correctly, optimize, and check the system’s stability and robustness. We do all of that to build our confidence that the rules work and are profitable, then we paper trade to ensure we can execute it seamlessly and mistake-free, then we bring those things together, and we go live.

That way, we can go live much quicker than if we were discretionary traders because if you’re a discretionary trader, you’ve got to collect data from trades. You got to say, “Okay, I need 50 set trades to see if my expectancy is positive,”.