Much is made of successful trading/betting strategies, but there's one mysterious thing that can happen to the best formulated strategy and that is that history doesn't necessarily repeat! You can historically backtest a strategy on past data or just record all past trades/bets and plot the outcome. It might look like the top left graph of profit after a series of trades/bets.
"
Eureka" you cry, "
I'm on a winner with this method!"
Unfortunately for many, those good days may never happen again? Monte Carlo simulation will sober you up to what you could expect going forward, might be more profit, losses or a rough patch that will shake many out of the tree as soon as they experience sustained losses? From the attachment, I've simulated 6 times the very same series of bets in random time order, and guess what, it's not all roses!
![Sad :(](./images/smilies/icon_e_sad.gif)
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