Compounding
Each trade risks the chosen percentage of the current balance. After a win, the next dollar risk can grow; after a loss, it can shrink. This makes both gains and drawdowns compound through the sequence.
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Monte Carlo Simulator
What are the odds your trading strategy will succeed?
Simulate your strategy’s equity curves using win rate, payout, risk and position sizing. Estimate profit probability, drawdowns and final account balances across repeated trading paths.
A Monte Carlo simulator builds many independent trade sequences from the assumptions you enter. Comparing those paths shows a distribution of possible balances, drawdowns, and threshold events; it cannot tell you which path real trading will follow.
Equity Curve Simulation
Simulation paths will appear here after you run the model.
Configure your strategy above and click “Run Simulation”.
How to Use This Monte Carlo Simulator
Build a scenario from the assumptions you can explain, then read its outcome distribution in context.
Enter your strategy assumptions
Use your observed win rate and a reward-to-risk estimate that matches your trade plan. The model samples each outcome independently from the rate you enter.
Set risk and account parameters
Choose starting capital, risk per trade, sizing mode, and a floor that defines a ruin event for this scenario.
Choose the number of trades and simulations
Each path uses the same trade count. More simulations show a wider sample of possible paths, while taking longer to calculate.
Run the simulation
Start a new run after you settle on the inputs. The browser worker calculates independent paths without blocking the page.
Compare the distribution
Read the middle and percentile outcomes together with ruin and drawdown measures. They describe the assumptions in this run, not a forecast.
Strategy Comparison Table
Compare five modeled profiles. Their example profit probabilities come from the same fixed horizon and settings listed below.
| Profile | Win Rate | Reward : Risk | Risk / Trade | Sizing | Expected Value / Trade | Example Profit Probability |
|---|---|---|---|---|---|---|
| Conservative | 40% | 3:1 | 0.5% | Fixed | +0.30% | 100% |
| Balanced | 55% | 1.5:1 | 1% | Compound | +0.375% | 100% |
| Aggressive | 60% | 1.5:1 | 2% | Compound | +1.00% | 100% |
| Scalper | 70% | 0.8:1 | 1% | Fixed | +0.26% | 100% |
| Swing Trader | 45% | 2.5:1 | 1.5% | Compound | +0.8625% | 100% |
Examples use 200 trades, 1,000 simulations, $25,000 starting capital, and a 50% initial-capital loss floor. They assume independent trades and the entered win rate and payout; real execution and costs are not modeled.
Position Sizing: Compounding vs. Fixed Dollar
Position sizing changes how a sequence of wins and losses affects the next trade.
Fixed Dollar
Each trade risks the chosen percentage of starting capital. For example, 1% of a $25,000 starting balance is $250 per trade even after the account moves up or down.
Run both modes with the same win rate and payout assumptions to compare their modeled paths. Neither mode removes trading risk.
Key Metrics Reference
Use these definitions to read the result values and percentiles.
- POPProbability of Profit
- The share of simulated paths that finish above their starting capital after the selected number of trades.
- RoRRisk of Ruin
- The share of paths that cross the selected percentage of initial capital at any point. A path remains counted even if it later recovers.
- MDDMaximum Drawdown
- The largest peak-to-trough decline within a single simulated equity path.
- 95%95th Percentile Max Drawdown
- A stress-case drawdown level: 95% of simulated maximum drawdowns are at or below it, and 5% are deeper.
- PFProfit Factor
- Gross winning R divided by gross losing R. If a path has no losing trades, its factor is infinite and the simulator displays ∞.
- EVExpected Value
- Average modeled outcome per trade in risk units. For these assumptions, EV in R combines win rate, reward-to-risk, and the loss rate.
- %ilePercentile
- A point in the ordered distribution of ending balances. The 25th percentile is below three quarters of the outcomes; the 75th is above three quarters.
- R:RReward-to-Risk Ratio
- The modeled reward for one unit of risk on a winning trade. A 1.5:1 ratio returns 1.5R for each 1R risked, before costs.
Related Trading Calculators
Pair a path simulation with tools for individual trade planning and drawdown context.
Start Tracking Real Results
Keep your trade history and review the results behind the assumptions you test here.
Frequently Asked Questions
What is a Monte Carlo simulation in trading?
It samples many independent win-or-loss sequences from the win rate and reward-to-risk assumptions you enter, then summarizes the resulting balance paths. It does not replay or shuffle a specific trade history, and it cannot predict which path will occur.
How many simulations should I run?
The calculator allows 100 to 10,000 paths. More paths can reduce sampling noise in percentile estimates, but they do not make the assumptions more accurate or turn the output into a forecast.
How does this simulator define risk of ruin?
A path counts as ruined if its balance falls below the selected percentage of its initial capital at any point during the run. It remains counted if it later climbs back above the floor.
What changes between compounding and fixed-dollar sizing?
Compounding calculates risk from the current balance on each trade. Fixed-dollar sizing keeps each trade’s dollar risk tied to the starting balance. Both approaches can produce losses and drawdowns.
What does the 95th percentile max drawdown mean?
It is the point at or below which 95% of simulated maximum drawdowns fall. Five percent of paths have a deeper maximum drawdown in this run, so it is a distribution measure rather than a guaranteed worst case.
Why does win rate need to be considered with reward-to-risk?
Win rate alone leaves out the size of wins relative to losses. Under the simple assumptions in this model, a 40% win rate with a 3:1 reward-to-risk has positive expected value, while 60% with a 0.5:1 reward-to-risk does not. Costs and execution can change real results.
This simulator is an educational scenario tool, not investment advice or a promise of future performance. It models independent outcomes from fixed assumptions and excludes commissions, slippage, changing market conditions, and other execution effects. Trading can result in the loss of capital.