Run Risk Of Ruin Before You Risk More
A Monte Carlo run cannot promise profit, but it can show whether your risk size survives normal variance.
The temptation after a good sample is to size up. The professional question is quieter: what drawdown could this same sample produce in a different order?
Risk-of-ruin and Monte Carlo views answer that question before real capital pays for the lesson.
Sequence matters
Two traders can have the same expectancy and very different equity stress if losses cluster. Simulated resampling shows how often that cluster appears.
Read the drawdown bands
Do not stare only at the best curve. Focus on worst drawdown bands, loss-streak frequency and the percentage of runs that breach your account rule.
Use simulations as brakes
A simulation is not a prophecy. It is a brake on overconfidence. If normal variance can violate your limit, the risk size is too large for that account.
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