Equity Curve Stress Tester

The Equity Curve Stress Tester (“Brutal Reality” Tool) is a Monte Carlo simulator that shows how a strategy behaves when trade outcomes arrive in different orders. Two systems can have the same expectancy, but very different lived experiences—professionals care about equity smoothness, not just “edge on paper.”

You input five parameters: win rate, risk-to-reward (R:R), risk % per trade, trades per month, and months to simulate. The tool then runs 100 randomized sequences of the same strategy assumptions (a simple Monte Carlo), compounding risk as a percentage of current equity. This produces 100 plausible equity curves for a fixed window (commonly 200 trades) so you can see the distribution of outcomes instead of one backtest line.

Key outputs are designed for decision-making:

• Worst-case drawdown: the largest peak-to-trough decline among the simulations. This is the number that tests whether your position sizing is survivable.
• Median ending balance: the “typical” outcome across runs. It’s a sanity check against cherry-picked backtests.
• Longest stagnation period: the longest stretch without making a new equity high. This measures psychological pressure and capital efficiency, not just profitability.

What this reveals quickly: risk % is the amplifier. Small changes in risk per trade can dramatically widen the spread between good and bad paths, increase drawdowns, and extend stagnation. Win rate and R:R matter, but their impact is filtered through position sizing and sequencing.

Use the tool to stress test whether a strategy is tradable under real conditions: if the worst drawdown breaks your limits, or the stagnation is longer than you can tolerate, you don’t have a “bad month” problem—you have a sizing and robustness problem. Re-run simulations to see how fragile or resilient the strategy really is.