You have some trigger event in your model that is either true or false. How can you find the probability that this event happens (or doesn’t happen)?
The trick is to use this event to set some other cell to zero or one, using an
IF function. Here, I am checking whether the market return is greater than zero (in cell
C6). I turn that into a 1 or 0 in cell
After running a simulation, the average value will equal the probability of that event happening during the simulation. You can use the
SimulationMean function to get the average value (in cell
Why does that work? It’s the same as counting up all the times during the simulation that the event was true, and then dividing it by the total number of trials – this is the probability.