Monte Carlo & robustness
Your equity curve is one path through history, the specific order the trades happened to arrive in. Monte Carlo asks: how different could it have been, and how bad a drawdown should you actually plan for?
One curve is one sample
The same set of trades in a different order produces a different looking equity curve and a different maximum drawdown. Judging a strategy on the single historical ordering overstates how much you know about it.
Resample a thousand times
Run this, then open the Monte Carlo risk analysis, on Pro and above. It reshuffles and resamples the trades a thousand times to build a distribution of outcomes. A robust edge stays profitable across most reorderings; a fragile one depends on a lucky sequence.
Plan for the tail, not the average
The most useful output isn't the median. It's the drawdown you'd face in a bad but plausible run. If the 95th percentile drawdown is deeper than you could stomach, the strategy is too risky for you even if its average looks great.
Run it live
The strategy for this lesson, in plain English:
“Buy BTC when the 20 day moving average crosses above the 50 day; sell when it crosses back below, on 1D, last 3 years.”
It opens already parsed, so you can read the rules before you spend a run.
Key takeaway
Size and judge a strategy by its bad runs, not its lucky one. Monte Carlo turns a single equity curve into the range of outcomes you should actually expect.
Terms in this lesson
Check yourself