Paper trading is the practice of executing trades against live market data without actually moving any money. The agent reads real prices, computes the same orders it would execute in production, records the fills, and tracks the PnL. But no token is ever transferred. This is how serious quant teams test strategies before going live — and why MAXIA enables it by default for every new agent.
A classic mistake: "buy 100 USDC worth of ETH" executes as "buy 100 ETH" because of a unit confusion. In paper trading this shows up as a negative PnL of thousands of dollars in the first minute — obviously wrong, easy to fix. In real trading it becomes a rugpull on your own wallet.
An agent might look profitable in backtests (historical data) and then lose money in live markets because the backtest did not model slippage, fees, or latency. Paper trading uses live prices and live latency, so it catches this gap between simulation and reality.
An agent tuned on the last 3 months will likely fail on different market regimes. Running paper trading for at least 2 weeks before going live shows whether the strategy is robust.
A rigorous process uses both: backtest first to validate the idea, then paper-trade for 2-4 weeks to confirm it works in live conditions, then go live with a small real allocation.
Every new MAXIA agent starts in paper mode. Calls to m.swap_execute() do not move any tokens — instead, they log a simulated fill at the current Pyth price, apply realistic slippage (0.1-0.5% based on the pair), and update a virtual portfolio. The agent sees exactly the same API responses as it would in live mode: trade ID, fill price, output amount, timestamp. The only difference is that no blockchain transaction happens.
To enable real trading, the agent calls m.enable_real_trading(confirm="I understand I can lose money") and the next swap_execute call moves real tokens. This explicit opt-in step is required on every agent and cannot be skipped by a config flag — it must be a live API call, which prevents accidental production deployments.