Monte carlo simulation

Trading Discussion
1

hello to everyone.
Recently i bumped the term ‘monte carlo’, and I would like to know how using this kind of system can be useful in forex market.
What is the purpose of using this method in the market?
thanks

2

Haha…

Scammer wants your money!!

“Monte Carlo analysis is a computational technique that makes it possible to include the statistical properties of a model’s parameters in a simulation.”

The problem is the model’s parameter… You talking about creating an Artificial intelligence LEVEL of model. I presume the model refers to the strategy. A strategy that is worth analysing is probably a robot that can do adaptive modification to a strategy and has auto learning capabilities.

Artificial intelligence have conquered the realms of chess. But they have yet to conquer FOREX! Hopefully not in my lifetime.
Quantum computer probably may have some hope.

Before you make any money, you probably go mad trying to use Monte Carlo analysis to conquer FOREX.

3

thank you for replying.
The calculation is on the risk / profit ratio I willing to take in my trades? or its a calculation to my real strategy like “expert advisor”?

4

I presume Monte Carlo analysis is a back testing methodology in analysing a particular strategy/system performance right? If you really INSIST on using this methodology. Its your prerogative. I can suggest the following.

First and foremost, you need to have a strict criteria on your definition of market TRENDING and market RANGING. Once you have the definition. Only then, can you identify from historical data when is the start of a trend and end of a trend, as well as the start and end of a ranging market.

Say you have a strategy X, now you can test the performance of this strategy X on these TWO period of time (trending and ranging). Only doing so, will Monte Carlo simulation be accurate.

5

Risk/reward ratio is a subset of Strategy.
Monte Carlo analysis is an attempt to find the Holy grail.

6

I doubt you will have a lot of success if you are looking for the holy grail…Monte Carlo or not. You are better off jetting to Monte Carlo if you know what I mean.