So you've done your backtesting and come up with an excellent equity curve and you're ready to test it out on the market with full confidence, right? 

WRONG!  Take the Win/Loss ratio, Win Probability, and Kelly Values from your backtest scenario and run them through this random equity curve generator to see how it  MIGHT look in the chaos of the real market.  Does it look good? Then click on "Generate" again, to generate a new one.  And again.   And again.  Get the picture?   Ready to go back to the drawing board yet?

This is courtesy of www.hquotes.com 

Frequently Asked Questions

What does this applet show? This applet simulates an equity curve of your account over the long term after systematically applying your trading rule with known parameters of Win Probability and Win/Loss ratio. A whole curve consists of about 450 pixels, or trades. Random generator decides (as the market does)with a given probability whether you win or lose in a given trade. So the equity trajectory is generated.

What is a "Win/Loss ratio" parameter? Divide your average winner by your average loser and you get Win/Loss ratio

What is a "Win Prob" parameter? This is the number representing probability of a winning trade of your trading system. For example, if you traded 100 times and won in 61 trades, then the probability to win is about 61% or 0.61.

What is a "Lines Qty" parameter? This is abbreviation for "Lines quantity". This is the number of equity curves to be generated and plotted simultaneously. This feature gives you an opportunity to see "what if" scenarios for any 'level of luck'. In other words, even your system wins in 99.9% of times, there's non-zero chance that all your trades can lose for example 10 times in a raw.

What are the "Kelly Val" and "Math Expect"parameters? Kelly Value and Mathematical Expectation of the trading system respectively. The first one determines the percentage of your capital you should put in a single trade in order to maximize the over-all account performance in a long run and minimize the risks of ruin. The second one is interpreted this way : if it is positive than historically your system wins on average, if it is negative then you better look for another strategy... These are calculated values. Read more about these important parameters here