The Monte Carlo Simulator for Forex Traders
Simulate your future returns with our advanced Monte Carlo Simulator
What is the Monte Carlo Method in Forex?
Monte Carlo Simulation, also known as the Monte Carlo Method, is a computer simulation technique used to estimate the possible outcomes and in the case of a trader, estimate a strategy's viability.
The goal of our Monte Carlo tool is to help illustrate and predict the variability of your trading returns with confidence. The simulation is based upon your trading strategy metrics like:
Risk percent of balance per 1 trade
Ratio Take profit/Stop loss
Break even %
Average trades per month
Total number of months that strategy will trade
* This is an educational tool and results should not be construed as investment advice.
The metrics tell a story...
Explore the meaning behind the numbers
Monte Carlo helps Forex traders establish probabilities of a number of important performance metrics:
Risk of ruin
The probability that a trader will lose a certain percentage of their capital
The peak-to-trough decline of an investment during a specific period
Annual rates of return
The average yearly profit rate
Return / drawdown ratios
The average return in a given period of time
The answers are hiding in the past...
How does the Monte Carlo Simulation work?
In the most simplistic way, the Monte Carlo simulation works on the theory that the best estimate of your future performance is derived from your past trades.
So how can it predict possible outcomes based on your past trades? The law of large numbers theory. Ever heard of it? Think of a 2 sided coin. If you toss that coin 10 times your distribution of heads and tails outcome could be 8:2 (in favour of tails). Tossing this 10 times would be classed as 1 sample. Tossing the coin a further 10 more times would be sample 2. Can we expect 8 tails and 2 heads again? Perhaps, although the distribution might be 6 heads and 4 tails in this sample.
What's important to understand here is that playing the coin toss game 1 million times, the distribution will be far closer to 50/50 (heads/tails) than what we find in a smaller "sample".
Playing the coin toss game 1 million times, the distribution will be far closer to 50/50 (heads/tails) than what we find in a smaller "sample".
When we trade our first 10 trades might not produce the outcome we expect to see over 1,000 trades. But as traders it's important we understand the behaviour and characteristics of what our strategy can produce in terms of wins / losses.
This way we can stay true to our rules despite going through a period of drawdown (negative returns). Therefore reducing the chance of trading emotionally, which is the last thing we want to do as traders!
In addition to the benefits of building confidence, you'll also begin to view trading like a professional, whereby you see it as a game of statistics. Past performance is not indicative of future returns. Future return distribution can vary yet still conform to the trading strategy metrics in the past.
Check out our other free forex trading tools
Our economic calendar showcases relevant events to help you trade these markets too.
Use our profit calculator to calculate the possible profit from a trade you're considering taking.
Lot Size Calculator
Calculate the correct lot size for your trade depending on your risk appetite. Enter your entry price and check your risk tolerance.
Currency Heat Map
Use our free currency heat map to determine the strongest and the weakest currencies on the market today.
Monte Carlo Simulator brought to you by the most advanced Trading Room
Join ForexSignals.com and let our educational lessons, daily live streams and community help you understand the financial markets.Watch demo
Switch between light and dark mode
Don't take our word for it
This is what other traders have to say about us...
- Forex TradingAs usual, Andrew was his excellent self, using his expansive knowledge and experience...2021-05-12
- ForexSignals.com is the best trading…ForexSignals.com is the best trading education platform I have found after 4 years of...2021-05-09
- Great platformGreat platform, very informative, I would highly recommend it for Forex traders, love...2021-05-04
- Best Forex education for newcomers!Forex Signals provides some of the best education for people new to Forex and trading...2021-05-04
- this is by far the best trading room…this is by far the best trading room ,so much help . if you are a learner or experie...2021-04-20
- its a unique communityits a unique community very helpful to all kind of traders, be it beginners or pros...2021-03-31
- Have learned a lotHave learned a lot. It's simple and easy to understand. I'm hoping to earn better in...2020-05-05
- Super helpfulSuper helpful. Actually amazing contents, requires nothing else but attention God bl...2020-05-04
- AmazingAmazing, learnt so much from the free videos sent. Would recommend anyone who wants t...2020-05-04
- Excellent Mr LockwoodGood one Mr. Lockwood the teaching was excellent and very explanatory infact I used t...2020-05-04
- Strong and preciseGood one Andrew, Very informative and well established. i really found it very help...2020-05-04
- It is amazing how I clearn and...It is was amazing how I could learn and understand much within a short space of time....2020-05-02
- ForexSignals is worth every penny!The guys at ForexSignals are so helpful, I myself follow Andrew and listen daily to h...2020-01-23
- My best portal everMy best portal ever. I was try many portal, but ForexSignals is the best portal. And...2020-01-18
- BEST FOREX TRADING EVERThe mentors of forexsignals are so very help full, I highly recommend this to whom go...2020-01-17
- Best in the world!!Best in the world!!! Great teachers, i have learned a lot. Thanks!!!2020-01-16
- I strongly recommend You Get This If…I strongly recommend You Get This If you are a complete Beginner And do not know wher...2020-01-15
- A great community with great mentors…A great community with great mentors who are available to guide you. Forex Signals su...2020-01-13
- The Best I had ever seen in my 5 years experienceI am writing my review after 3 months of my membership with this great provider . I...2019-12-22
- The live streams are brilliant and the…The live streams are brilliant and the training videos have also been absolutely fant...2019-12-16
- Best Mentors with good understanding…Best Mentors with good understanding how the market works! Feel free to try free tria...2019-11-20
- Great site for trading signals and trainingI´ve been a member of this site for over a year and half, and I must say that they´...2019-11-01
- The Best of Forex!Andrew's passion, wisdom and years of experience are obvious in his videos. I love hi...2019-10-15
- Amazing Trading CommunityGreat trading community to learn and improve your trading ideas Its academy is also...2019-10-15
- Trading signals and trainingI´ve been a member of this site for over a year and half, and I must say that they´...2019-09-29
- You cant go wrong with this serviceBeen with these guys for two years and this should say it all. Andrew Mark and Max go...2019-09-13
- Very knowledgable mentors who are willing to assist always.Joined 7months ago as a novice .I am now able to cherry pick profitable trades. With...2019-09-10
- Enlightening!Been with the company for more than a year and I must say they've helped me bring my...2019-07-04
- Excellent trading room with strong educational supportForexSignals is by far the best trading room I have come across, and the only one I s...2019-07-04
- briseisI've been a trader for many years and this has also helped me because of the 24hr liv...2018-08-11