I looked at the Monte Carlo simulation and ran the test on a strategy. I don't quite understand Monte Carlo explanation and the chart that is displayed in NT8 documentation page.
What is Monte Carlo Simulation?
Monte Carlo Simulation is a mathematical technique that uses repeated random sampling ("sampling with replacement") to compute a range of possible results with their respective probability. NinjaTrader runs Monte Carlo Simulation by randomly combining the trade results in a defined series of simulations. A graph of the results are plotted with the statistic values or Profit/Loss on the Y - axis and the probability on the X - axis as a percentage.
Question 1: How does NT8 combine trade results in a defined series of simulations? What does it mean by a defined series of simulations or what kind of simulations?
Question 2: Would you be able to explain in simple terms what does Monte Carlo report means and how I should read it. I read the explanation but I am still a bit confused about the X-Axis explanation. What does the green, blue, yellow, lines means. Are these four different scenarios (Best to Worse)? Can I look at the details of these scenarios?
https://ninjatrader.com/support/help...carlograph.png
Thanks,
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