3 Examples of Monte Carlo Simulation in Python
Introduction
In this post, we will understand what is Monte Carlo Simulation, what are its typical steps along with benefits and limitations. We will also take a look at its real-world application followed by a few examples of Monte Carlo simulation in Python along with visualization for better clarity.
What is Monte Carlo Simulation
Monte Carlo simulation is a computational technique to approximate the behavior or output of a complex system or problem by repeated random sampling. This method relies on the Probability Theory concept of the Law of Large Numbers which states that if an experiment is repeated a large number of times then its average results will converge towards the expected value.
Steps in a Monte Carlo Simulation