This term has come from the stock market and practically means trading on a demo account. The investor models their trades, analyses them, and counts profits and losses on their positions.
Paper trading lets the trader assess their strengths, get more practice on a virtual account, check and improve their trading strategies, and learn to follow signals from more experienced market participants.
Practising on a demo account is a great opportunity for beginners to adapt to market conditions and get acquainted with all the features of the trading platform before investing real money.
Paper Trading uses a free demo account with real charts, essentially simulating stock trading.