Monte Carlo Simulator
A win rate is not a result. Run the same edge across 1,000 random trade sequences to see the whole range of outcomes it can produce, how deep the drawdowns get, and how often it wipes you out.
How the simulation works
- 01
Each trade is a weighted coin flip: it wins with your win-rate probability, and when it wins it pays your reward-to-risk multiple of the amount risked.
- 02
Risk is taken as a percentage of your current balance, so wins and losses compound instead of being fixed dollar amounts.
- 03
That sequence is repeated 1,000 times. Because the order of wins and losses is random, identical edges produce very different equity curves, which is exactly the point.
Each trade: equity += win ? equity × risk% × R : −equity × risk%
Worked examples
Frequently asked questions
What is a Monte Carlo simulation in trading?
It re-runs your strategy many times with the order of wins and losses shuffled at random. Instead of a single backtest result, you get a distribution of what the same edge could plausibly have produced, which is a far more honest picture.
Why do identical inputs give different results each run?
They do not, unless you press "run again". Each run uses a fresh random sequence, so the fan of curves shifts. That instability is the finding: luck moves the outcome a lot more than most traders expect.
What counts as risk of ruin here?
The share of runs whose drawdown ever reached your ruin threshold, measured from the peak. The default is 50%, but you can set it: most traders quit long before losing half the account, so a 30% threshold is often the more honest number for how survivable the plan really is.
Compounding or fixed dollar, which should I pick?
Compounding risks a percentage of your current balance, so wins grow the bet and losses shrink it. Fixed dollar risks the same cash amount every trade, sized off your starting balance. Compounding grows faster and drawdowns bite harder in percentage terms; fixed dollar is flatter and easier to survive. Most systematic traders compound.
Where do I get my real win rate and R?
From a backtest or a trade journal, not from a guess. This tool shows what an edge implies; measuring the edge itself takes running the strategy against real historical prices.
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Not financial advice. This calculator is an educational tool, not financial advice. Trading carries substantial risk and you can lose some or all of your capital. Figures are estimates. Verify against your exchange's own margin, fee and liquidation rules before trading.