Eff One

This guide will walk you through the process of analyzing your 3-year, 5-minute historical price series data and help you understand which price generation models are most suitable for modeling its behavior.

This report provides a comprehensive analysis of six quantitative models—Markov Series (Markov Chains), Random Walk Model, ARIMA Model, GARCH Models, Monte Carlo with Historical Bootstrapping, and Geometric Brownian Motion (GBM) Model—specifically for their application in generating and simulating prices to test trading strategies across various financial markets. The objective is to elucidate the core principles, assumptions, strengths, and limitations of each model, alongside their suitability for Forex, Stock, Crypto, and Options trading.

This report proposes a more robust alternative to traditional backtesting by using Monte Carlo simulations with Geometric Brownian Motion and its extensions to model thousands of realistic market scenarios. This approach enhances risk assessment and strategy validation under diverse and extreme conditions.