Monte Carlo Simulator
Simulate thousands of possible trading outcomes to understand the full range of your system's potential.
Simulation Results
- Your system has positive expectancy of 0.55R per trade
- 50% of outcomes end above $15,500 after 100 trades
- Only 2.3% chance of account falling below $5,000
- Expect drawdowns of 15-20% even with a winning system
Understanding Monte Carlo Simulation
What is Monte Carlo?
Monte Carlo simulation runs thousands of random scenarios based on your trading stats. Instead of one possible outcome, you see the full range of what could happen.
Why Distributions Matter
Expected value alone doesn't show the whole picture. Two systems with same expectancy can have very different risk profiles. Monte Carlo reveals these differences.
Understanding Risk of Ruin
Even profitable systems can blow up with bad luck. Monte Carlo shows your probability of hitting a devastating drawdown before reaching your goals.
🔧 How Monte Carlo Simulation Works
📖 Interpreting Your Results
Risk of Ruin
Max Drawdown (Typical)
Frequently Asked Questions
What is a Monte Carlo simulator in forex trading?
A Monte Carlo simulator is a tool that runs thousands of random trading scenarios based on your statistics (win rate, R:R, risk per trade). Our Monte Carlo simulator shows the full distribution of possible outcomes, not just the expected value, helping you understand real risk.
How does Monte Carlo simulation work?
The simulation generates random win/loss sequences based on your win rate, applies your R:R and risk to calculate P/L, tracks the equity curve, and repeats 1000+ times. Our Monte Carlo simulator then analyzes percentiles, risk of ruin, and typical drawdowns from all runs.
How many simulations should I run?
1,000 simulations gives reasonable accuracy for most purposes. 5,000+ gives more precise percentile estimates. More simulations = more accurate but slower. Our Monte Carlo simulator defaults to 1,000 which is sufficient for most analyses.
Why do results vary each time I run it?
Monte Carlo uses random number generation. Each run produces slightly different results due to randomness. This is normal and expected. The more simulations you run in our Monte Carlo simulator, the more stable your percentile estimates become.
My system shows positive expectancy but high risk of ruin?
This usually means you're risking too much per trade. Even great systems can blow up with aggressive position sizing. Our Monte Carlo simulator helps identify this. Try reducing risk per trade until risk of ruin drops below 2%.
How accurate is the Monte Carlo simulation?
Monte Carlo assumes: (1) trades are independent, (2) your win rate and R:R are accurate, (3) future matches past. Real trading has correlations, changing conditions, and psychological factors not modeled here. Use our simulator as a guide, not gospel.
What's a good risk of ruin percentage?
Professional traders aim for <1-2% risk of ruin. Under 5% is acceptable for most. Above 10% means your position sizing is too aggressive for your edge. Use our Monte Carlo simulator to test different risk levels and find the safe zone.
What do the percentile results mean?
Percentiles show outcome distribution. 10th percentile = worst 10% of outcomes. 50th = median (half above, half below). 90th = best 10%. Our Monte Carlo simulator shows these to help you understand both upside potential and downside risk of your strategy.
Can Monte Carlo simulation predict my trading results?
No - it shows the range of possible outcomes given your inputs, not predictions. Real results depend on accurate statistics and consistent execution. Our Monte Carlo simulator is for planning and risk assessment, not fortune-telling.
Why should I use Monte Carlo instead of just expected value?
Expected value only shows the average outcome. Monte Carlo shows the full distribution - you might average +50% but have 10% chance of -30%. Our Monte Carlo simulator reveals sequence risk and drawdown probability that expected value hides.