Trading Simulator

How It Works

The Trading Simulator operates on a set of predefined rules and calculations, allowing users to input various parameters and observe the simulated trading results. The tool generates a series of trades, considering factors such as win rate, risk-reward ratio, compounding, and platform fees. It then calculates and presents key performance metrics to help users assess the effectiveness of their trading strategy.

Parameters

1. Initial Balance

The initial balance represents the starting capital for the trading simulation. It is the amount of money the trader begins with before executing any trades.

2. Total Trades Count

This parameter specifies the total number of trades to be simulated. The tool will generate a sequence of wins and losses based on the provided win rate.

3. Win Rate

The win rate is the percentage of trades that end in a profit. For example, a win rate of 50% means that half of the simulated trades will be profitable.

4. Risk-Reward Ratio

The risk-reward ratio defines the relationship between potential profit and potential loss in each trade. It helps traders assess the risk they are taking for the expected reward.

5. Compounding

The compounding parameter determines whether profits are reinvested in subsequent trades. Enabling compounding can lead to exponential growth in the trading account over time.

6. Platform Fee Rate

The platform fee rate represents the cost associated with executing each trade on the trading platform. It is usually a percentage of the trade size.

Interpreting Results

Upon simulating the trades, the tool provides a set of results and key statistics, including:

• Gross PNL (Profit and Loss): The overall profit or loss from all simulated trades.
• Net PNL: The net profit or loss, accounting for platform fees.
• Maximum Drawdown (MDD): The maximum percentage loss from the highest point in the account balance to the lowest point.