A brokerage statement is a handful of numbers that most people half-understand. Misreading them leads to real mistakes — selling winners to “lock in” a figure that was never the one that mattered, or believing a position is profitable when the account is not. This module works through each number with arithmetic you can check by hand.
The top of the Paper Trading page shows four figures. They fit together exactly:
Cash / buying power is what you can spend right now. Because the simulator has no borrowing, you can never spend more than this. Open positions counts how many different holdings you have, and shows how many dollars are invested. Total return is the only figure that answers “am I ahead?” — it includes everything, realized and unrealized, and it is measured against the $100,000 you started with.
Buy the same stock more than once and you pay different prices. The account tracks one blended number: the average cost per share.
The simulator uses average cost, which happens to match how Canada taxes shares: the Canada Revenue Agency requires you to pool identical shares into one adjusted cost base. In the United States, brokers track each purchase as a separate tax lot and usually default to selling the oldest first (“first in, first out”) unless you choose otherwise — so the same trades can report a different realized gain there.
While you hold a position, its gain or loss is unrealized — it exists on paper and changes with every price tick. When you sell, the gain or loss on the shares sold becomes realized and is fixed forever.
That last sentence is worth reading twice. Selling converts a gain from one column to another; it does not create it. Yet realized gains feel more real, and realized losses feel like admitting a mistake. The result is a well-documented habit researchers call the disposition effect: investors sell winners too early and hold losers too long. Terrance Odean’s 1998 study of 10,000 US discount-brokerage accounts found exactly that — and that the winners people sold went on, over the following year, to outperform the losers they kept.
The question to ask of any position is never “is it up or down from what I paid?” — the market does not know what you paid. It is “knowing what I know today, would I buy this, at this price, in this size?”
A stock that doubled sounds like a triumph. Whether it mattered depends on how much of the portfolio it was.
A 4% position that gains 50% adds about 4% × 50% = 2 percentage points to the portfolio. A 40% index-fund core that gains just 10% adds 40% × 10% = 4 points — twice as much. This is why a portfolio full of exciting winners can still trail a plain index fund: the winners were small, and the core was where the money was.
The chart under the headline numbers plots your account value over time, with 1-day, 1-week, 1-month and all-time views. It starts the moment you first use the account and builds as you trade and as prices move.
The most useful thing to read from it is the drawdown: how far the account is below its highest point so far.
If the account peaked at $112,000 and is now $95,200, the drawdown is ($95,200 − $112,000) ÷ $112,000 = −15% — even though total return is still −4.8% and a casual glance at “only down a few percent” would miss it. Module 6 is about what to do when that number grows.
Educational purposes only; not financial advice. Paper trading is a simulation: no real money or securities are involved, and simulated results do not reflect the spreads, fees, currency conversion, taxes or emotions of real investing. Historical figures are illustrative and are not a forecast. Always do your own research and consult a licensed advisor.