#MonteCarloSimulation

[projectmanagertemplate]

Project management estimation techniques help in forecasting the time, cost, and resources required to complete a project. Different techniques are used depending on the complexity, available data, and phase of the project. Below is a comparison of common estimation techniques in project management, covering their methods, strengths, and weaknesses.

[gpstudios]

Blog Post: The Misinterpretation of Random Events – Insights from Chapter 2 of "Fooled by Randomness"

Discover how Nassim Taleb's "Fooled by Randomness" reveals our tendency to see patterns in random events, leading to cognitive biases and false conclusions. Learn to navigate the complexities of randomness wisely.

Welcome back to our exploration of Nassim Nicholas Taleb’s “Fooled by Randomness.” In Chapter 2, titled “A Bizarre Accounting Method,” Taleb delves into how humans misinterpret random events, often seeing patterns and meaning where none exist. This chapter sheds light on our cognitive biases and the importance of understanding randomness more accurately. The Human Tendency to See…

[guillaumelauzier]

Monte Carlo Simulation in Finance: Traditional and Decentralized

The Monte Carlo Simulation (MCS) is a mathematical technique that allows you to understand the impact of risk and uncertainty in prediction and forecasting models. Named after the famous Monte Carlo Casino in Monaco, this method utilizes random sampling and statistical modeling to simulate the possible outcomes of uncertain events. The simulations are run thousands, or even millions, of times, to identify all possible outcomes. The results are then used to analyze the probabilities of different results occurring. In essence, Monte Carlo Simulations convert uncertain outcomes into more predictable outcomes.

Monte Carlo Simulation in Traditional Finance

In traditional finance, Monte Carlo Simulations play a critical role in various areas, including options pricing, investment portfolio optimization, and risk management. Options Pricing Black-Scholes-Merton is a well-known model for options pricing. However, it assumes constant volatility and interest rates, which is rarely the case in real life. To handle these complexities, financial analysts use MCS to value options with multiple sources of uncertainty and in cases where an option is dependent on several assets. Investment Portfolio Optimization Investors and financial advisors use MCS to optimize investment portfolios. By simulating various combinations of assets and their expected returns and risks, MCS can predict the probability of achieving a target return, helping investors understand potential risks and make informed decisions. Risk Management Risk managers employ MCS to assess the potential risk of financial portfolios. It allows them to model complex, unpredictable market conditions and measure their possible impact on investment portfolios. It can provide insights into Value at Risk (VaR), Conditional Value at Risk (CVaR), and other risk metrics.

Monte Carlo Simulation in Decentralized Finance (DeFi)

Decentralized Finance, also known as DeFi, is a blockchain-based form of finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks to offer traditional financial instruments. The principles of MCS are increasingly being applied to this emerging field to manage risk and inform strategy. Liquidity Provision and Yield Farming DeFi protocols allow users to become liquidity providers (LPs) and earn fees. However, the return on investment can fluctify due to "Impermanent Loss," a unique risk associated with providing liquidity in DeFi protocols. MCS can simulate various market scenarios, providing LPs with insights into potential earnings and risks. Yield farming, a popular DeFi practice, involves lending assets to earn high returns. Using MCS, yield farmers can simulate numerous scenarios, including price changes and default rates, to understand the possible outcomes and risks. DeFi Derivatives DeFi platforms have also started to offer decentralized derivatives, such as options and futures. The pricing and risk assessment of these financial instruments can be complex due to the volatility of the underlying assets. MCS provides an effective way to price these derivatives and understand their potential risk and reward. DeFi Protocol Risk Assessment With the advent of smart contracts, DeFi protocols can automatically execute contracts without the need for intermediaries. However, these protocols can be complex and hold potential risks such as smart contract bugs and market manipulation. MCS can help users and developers understand these risks by simulating different scenarios and assessing their impact.

The Mathematical Principle of Monte Carlo Simulation

The mathematical principle behind the Monte Carlo Simulation is straightforward. It relies on the Law of Large Numbers, which states that as the number of trials or instances increases, the results obtained should approximate the expected value. Monte Carlo Simulations use a random sampling process to solve deterministic problems. They generate large numbers of random inputs to a function and compute the output for each. By doing this, they can generate a distribution of possible output values. The general formula for a Monte Carlo Simulation is: Y = f(X) Where: - Y is the output of the simulation, - f is the function that represents the model or system being simulated, and - X is a vector of random inputs. If you wanted to use Monte Carlo Simulation to estimate the value of pi, for example, you could use a simple 2D geometric model. The model would simulate throwing darts randomly onto a square dartboard with a circular bullseye. The ratio of darts landing inside the circle to total darts thrown, multiplied by 4, can be used to estimate pi. The pseudo code would look something like this: total_darts_thrown = 0 darts_in_circle = 0 For i = 1 to N x = random number between -1 and 1 y = random number between -1 and 1 if x*x + y*y Read the full article

[arkroyalwealthmanagement]

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[whitepegasuscons]

Few Steps to Get Started with Monte Carlo Simulation

• Identify the Transfer Equation

• Define the distribution & parameters of each input

• Set up the Simulation

• Give each variable a name & select a distribution• Simulate & analyze the process output

Learn More

[agile-world]

Craig Cockburn on Agile Coaching S04 E13 Today our Agile World co-hosts Sabrina C E Bruce and Karl A L Smith talk with Craig Cockburn https://www.linkedin.com/in/siliconglen/ about where he is in his journey. Mentioning "Actionable Agile" https://actionableagile.com/ Jira plugin by Daniel S. Vacanti https://www.linkedin.com/in/danielvacanti/ for flow metrics, Monte Carlo simulations - Monte Carlo methods, or Monte Carlo experiments, are a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results. The underlying concept is to use randomness to solve problems that might be deterministic in principle. Craig Cockburn continues to hit a wide variety of subjects, including Value Points, www.agile-world.news #AgileWorld #AgileTalkShow #Agile https://agile-world.news/craig-cockburn-on-the-current-experience-in-agile-coaching-s04-e13/?utm_source=tumblr&utm_medium=Agile+World&utm_campaign=Agile+World

[towardsai]

"Monte Carlo Simulation An In-depth Tutorial with Python https://bit.ly/394NHxG ⠀ ⠀ #mw #tutorial #montecarlo #montecarlosimulation #programming #100daysofcode #python #coding #development ⊕ [ Link on Bio ] ��"

[phungthaihy]

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[toolshero]

Need an analysis technique that shows a wide scale of possible outcomes and chances and also all the possibilities in order to come to the correct decision? Check the Monte Carlo Simulation: https://www.toolshero.com/decision-making/monte-carlo-simulation/ #riskanalysis #decisionmaking #montecarlosimulation #toolshero

[agile-world]

Craig Cockburn on Agile Coaching S04 E13 Today our Agile World co-hosts Sabrina C E Bruce and Karl A L Smith talk with Craig Cockburn https://www.linkedin.com/in/siliconglen/ about where he is in his journey. Mentioning "Actionable Agile" https://actionableagile.com/ Jira plugin by Daniel S. Vacanti https://www.linkedin.com/in/danielvacanti/ for flow metrics, Monte Carlo simulations - Monte Carlo methods, or Monte Carlo experiments, are a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results. The underlying concept is to use randomness to solve problems that might be deterministic in principle. Craig Cockburn continues to hit a wide variety of subjects, including Value Points, www.agile-world.news #AgileWorld #AgileTalkShow #Agile https://agile-world.news/craig-cockburn-on-the-current-experience-in-agile-coaching-s04-e13/?utm_source=tumblr&utm_medium=Agile+World&utm_campaign=Agile+World

[agile-world]

Craig Cockburn on Agile Coaching S04 E13 Today our Agile World co-hosts Sabrina C E Bruce and Karl A L Smith talk with Craig Cockburn https://www.linkedin.com/in/siliconglen/ about where he is in his journey. Mentioning "Actionable Agile" https://actionableagile.com/ Jira plugin by Daniel S. Vacanti https://www.linkedin.com/in/danielvacanti/ for flow metrics, Monte Carlo simulations - Monte Carlo methods, or Monte Carlo experiments, are a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results. The underlying concept is to use randomness to solve problems that might be deterministic in principle. Craig Cockburn continues to hit a wide variety of subjects, including Value Points, www.agile-world.news #AgileWorld #AgileTalkShow #Agile https://agile-world.news/craig-cockburn-on-the-current-experience-in-agile-coaching-s04-e13/?utm_source=tumblr&utm_medium=Agile+World&utm_campaign=Agile+World

[agile-world]

Craig Cockburn on Agile Coaching S04 E13 Today our Agile World co-hosts Sabrina C E Bruce and Karl A L Smith talk with Craig Cockburn https://www.linkedin.com/in/siliconglen/ about where he is in his journey. Mentioning "Actionable Agile" https://actionableagile.com/ Jira plugin by Daniel S. Vacanti https://www.linkedin.com/in/danielvacanti/ for flow metrics, Monte Carlo simulations - Monte Carlo methods, or Monte Carlo experiments, are a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results. The underlying concept is to use randomness to solve problems that might be deterministic in principle. Craig Cockburn continues to hit a wide variety of subjects, including Value Points, www.agile-world.news #AgileWorld #AgileTalkShow #Agile https://agile-world.news/craig-cockburn-on-the-current-experience-in-agile-coaching-s04-e13/?utm_source=tumblr&utm_medium=Agile+World&utm_campaign=Agile+World

[agile-world]

Craig Cockburn on Agile Coaching S04 E13 Today our Agile World co-hosts Sabrina C E Bruce and Karl A L Smith talk with Craig Cockburn https://www.linkedin.com/in/siliconglen/ about where he is in his journey. Mentioning "Actionable Agile" https://actionableagile.com/ Jira plugin by Daniel S. Vacanti https://www.linkedin.com/in/danielvacanti/ for flow metrics, Monte Carlo simulations - Monte Carlo methods, or Monte Carlo experiments, are a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results. The underlying concept is to use randomness to solve problems that might be deterministic in principle. Craig Cockburn continues to hit a wide variety of subjects, including Value Points, www.agile-world.news #AgileWorld #AgileTalkShow #Agile https://agile-world.news/craig-cockburn-on-the-current-experience-in-agile-coaching-s04-e13/?utm_source=tumblr&utm_medium=Agile+World&utm_campaign=Agile+World

[agile-world]

Craig Cockburn on Agile Coaching S04 E13 Today our Agile World co-hosts Sabrina C E Bruce and Karl A L Smith talk with Craig Cockburn https://www.linkedin.com/in/siliconglen/ about where he is in his journey. Mentioning "Actionable Agile" https://actionableagile.com/ Jira plugin by Daniel S. Vacanti https://www.linkedin.com/in/danielvacanti/ for flow metrics, Monte Carlo simulations - Monte Carlo methods, or Monte Carlo experiments, are a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results. The underlying concept is to use randomness to solve problems that might be deterministic in principle. Craig Cockburn continues to hit a wide variety of subjects, including Value Points, www.agile-world.news #AgileWorld #AgileTalkShow #Agile https://agile-world.news/craig-cockburn-on-the-current-experience-in-agile-coaching-s04-e13/?utm_source=tumblr&utm_medium=Agile+World&utm_campaign=Agile+World

[agile-world]

Craig Cockburn on Agile Coaching S04 E13 Today our Agile World co-hosts Sabrina C E Bruce and Karl A L Smith talk with Craig Cockburn https://www.linkedin.com/in/siliconglen/ about where he is in his journey. Mentioning "Actionable Agile" https://actionableagile.com/ Jira plugin by Daniel S. Vacanti https://www.linkedin.com/in/danielvacanti/ for flow metrics, Monte Carlo simulations - Monte Carlo methods, or Monte Carlo experiments, are a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results. The underlying concept is to use randomness to solve problems that might be deterministic in principle. Craig Cockburn continues to hit a wide variety of subjects, including Value Points, www.agile-world.news #AgileWorld #AgileTalkShow #Agile https://agile-world.news/craig-cockburn-on-the-current-experience-in-agile-coaching-s04-e13/?utm_source=tumblr&utm_medium=Agile+World&utm_campaign=Agile+World