Enter your win rate, risk-reward ratio, and risk per trade to simulate 1,000+ equity curves. See your probability of profit, risk of ruin, and expected drawdowns before risking real capital.
A Monte Carlo simulator is a tool that generates thousands of randomized equity curves based on your trading strategy's win rate, risk-reward ratio, and position sizing to reveal the probability distribution of possible outcomes — from best-case profits to worst-case drawdowns and risk of ruin.
EV per Trade = (Win Rate × Avg Win) − (Loss Rate × Avg Loss)
A Monte Carlo simulation in trading uses random sampling to generate thousands of possible equity curves based on your strategy's historical win rate and risk-reward ratio. Each simulation randomly determines whether each trade wins or loses, then plots the resulting account balance over time. By running 1,000+ simulations, you can see the full range of possible outcomes and calculate the probability of hitting profit targets, experiencing specific drawdown levels, or going broke.
The industry standard is 1,000 simulations, which provides statistically reliable probability estimates. At 1,000 runs, the law of large numbers ensures your percentile calculations and risk metrics converge to stable values. You can run up to 10,000 for extra precision, but the marginal improvement above 1,000 is minimal for most trading strategy analysis.
Risk of ruin measures the probability your account drops below a defined threshold at any point during a trading sequence. This simulator checks every trade, not just the final balance. Set your ruin threshold (e.g. 50% drawdown), then the engine flags any simulation where the equity curve ever touches that level. The result is expressed as a percentage of total simulations that hit ruin.
Compounding risks a percentage of your current balance on each trade, so position size grows after wins and shrinks after losses. Fixed dollar risks a percentage of your starting balance throughout the entire sequence, keeping dollar risk constant. Compounding amplifies both gains and drawdowns; fixed dollar produces more linear equity curves and is easier to benchmark.
The 95th percentile max drawdown is the worst peak-to-trough decline you would experience in 95% of simulations. Only 5% of runs produce a drawdown larger than this value. It gives you a realistic worst-case planning number that is more useful than the single worst simulation, which may be a statistical outlier.
There is no universal good win rate because it depends on your risk-reward ratio. A 40% win rate with a 3:1 R:R is more profitable than a 60% win rate with 0.5:1 R:R. Use this simulator to test different combinations. Generally, professional traders operate between 40-60% win rates with R:R ratios of 1.5:1 or higher.
