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Simulate your future returns with our advanced Monte Carlo Simulator
Go to calculator
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (3)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/home/hero-bg.webp "Monte Carlo Simulator [Free Tool] - ForexSignals.com (3)")
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:
Initial balance
Risk percent of balance per 1 trade
Ratio Take profit/Stop loss
Win %
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.
Initial balance
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Result balance
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Return % after whole period of trading
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Maximum drawdawn
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Max consecutive losses
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Max consecutive wins
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Win trades percentage
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![Monte Carlo Simulator [Free Tool] - ForexSignals.com (4)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/vid/video-thumb.jpg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (4)")
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (5)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/icons/play-video.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (5)"){kind=icon}
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
Maximum drawdowns
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
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (6)](https://i0.wp.com/www.forexsignals.com/img/free-tools/mc-simulator.png "Monte Carlo Simulator [Free Tool] - ForexSignals.com (6)")
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".
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (7)](https://i0.wp.com/www.forexsignals.com/img/free-tools/coin-flip.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (7)")
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
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (8)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/free-tools/stats.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (8)")
Economic Calendar
Our economic calendar showcases relevant events to help you trade these markets too.
Economic Calendar
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (9)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/free-tools/lot-size-calc.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (9)")
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.
Lot Size Calculator
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (10)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/free-tools/profit-calc.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (10)")
Profit Calculator
Use our profit calculator to calculate the possible profit from a trade you are considering taking.
Profit Calculator
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (11)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/free-tools/heatmap-icon.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (11)"){kind=icon}
Currency Heat Map
Use our free currency heat map to determine the strongest and the weakest currencies on the forex market today.
Currency Heat Map
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (12)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/free-tools/pp-calculator-icon.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (12)"){kind=icon}
Pivot Point Calculator
Struggling to find Pivot Points on your chart? Use our advanced Pivot Point Calculator & find significant support & resistance levels in a matter of seconds.
Pivot Point Calculator
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (13)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/free-tools/pip-calculator-icon.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (13)"){kind=icon}
Pip Calculator
With our free pip calculator you can calculate the pip value in the currency you want to trade in and manage your risk before entering a trade.
Pip Calculator
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (14)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/icons/icon-currency-heatmap.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (14)"){kind=icon}
Currency Strength Meter
Our free currency strength meter gives you a visual guide to determine the strongest and the weakest currency pairs on the Forex market in real-time.
Currency Strength Meter
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (15)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/free-tools/support-resistance-icon.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (15)"){kind=icon}
Support Resistance EA
Download our Support & Resistance EA for MetaTrader 4 (MT4) developed by internationally-recognised Forex experts.
Support Resistance EA
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (16)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/free-tools/margin-calculator.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (16)")
Forex Margin Calculator
The Forex margin calculator can help you calculate the exact margin needed to open and hold your trading position with ease and trade with confidence.
Forex Margin Calculator
![Monte Carlo Simulator [Free Tool] - ForexSignals.com (17)](https://i0.wp.com/d2dqy7n9gbes77.cloudfront.net/img/free-tools/cagr-calculator-icon.svg "Monte Carlo Simulator [Free Tool] - ForexSignals.com (17)"){kind=icon}
CAGR Calculator
Calculate the Compound Annual Growth Rate of your investments with our easy-to-use CAGR Calculator.
CAGR Calculator
Show more..
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