How should you think about Monte Carlo equity paths?

A Monte Carlo simulator is a path-distribution tool. It helps you stop staring only at CAGR and instead ask what kinds of drawdowns, unlucky stretches, and terminal ranges are compatible with your assumptions.

Monte Carlo is not a replacement for a real historical backtest. It does not know your market microstructure, your signal logic, or which regimes truly existed in the data. It is a simplification built to sharpen intuition, not prove an edge.

The most common mistake is treating the median line as the forecast. The useful reading is the spread around it. If the 10th percentile path is unacceptable for your process or risk tolerance, the pretty median does not save you.

The GBM simulator gives you a fast way to reason about path dependence before you have a polished strategy. That makes it a great public learning surface, especially when paired with scenario pages that explain how a calm equity curve and a violent one can both be mathematically plausible.