A simulation showing a negative result does not automatically mean the plan is bad. It means the period you picked did not give your buys time to close at a profit.
Period choice matters
The most common reading mistake: running a simulation that ends near a local low.
Example: you run from November 2021 to December 2022. Every buy landed above the closing price. The simulation prints a negative number. That is not a plan failure. It is the answer to what would I have now if I had started at the peak.
Try the same strategy across several different periods:
- Across a full cycle, bear to bear or bull to bull.
- Across random 12-month windows, with 3 or 4 different start dates.
- Across the full available history.
If the result is negative everywhere, there is a structural problem. If it is only negative in a cherry-picked worst case, the plan is fine.
Open positions hide value
A simulation with negative realized profit but many open positions is misleading. Open positions still have value. Not realized, but present in the wallet.
Example: 1,000 EUR spent, 50 EUR realized profit, but 800 EUR of open positions averaging 5% above the current price. The negative shown refers only to mark-to-market loss on the open ones.
When those positions eventually hit take-profit, the negative becomes positive. The simulation gives you a snapshot at a chosen point, not the final outcome.
How to read it correctly
When you see a negative simulation, ask:
- How much realized profit has been locked in?
- How many positions are open, and how far from their take-profit?
- How much deployed capital was needed at peak?
- What ROI would I have if the period ran another 3 months?
After those 4 questions, the negative result usually gains context. Rarely is it actually the plan does not work. More often it is I checked a scenario that ends at the wrong point.
