What is Monte Carlo simulation?Monte Carlo Simulation

Using random numbers to replay the same strategy hundreds or thousands of times, revealing the spread of possible outcomes instead of a single historical curve.

Learn “Monte Carlo simulation” in an animated lesson

Risk Management & Trading Psychology
Losing Streaks and the Risk of Ruin
The same profitable strategy can produce wildly different equity curves with different luck. Use a Monte Carlo simulation to run hundreds of possible futures and see how bad it can get.

Related terms

risk/reward ratio
win rate
maximum drawdown
risk per trade
risk of ruin

See how “Monte Carlo simulation” works for yourself with an animation you can drag and play.

Go to “Losing Streaks and the Risk of Ruin”