# Monte Carlo simulation in Excel – that’s how it works  Monte Carlo simulations are used in Excel to calculate probabilities. How to create such a simulation can be read in this practical tip. Possible uses of a Monte Carlo simulation in Excel The Monte Carlo simulation in Excel attempts to solve problems that can not be solved analytically or only with difficulty using probability theory. With this simulation, it is therefore possible to model and calculate complex processes, to simulate static behavior and to calculate distribution properties of random variables. Thus, for example, it is possible to predict the probability of rainfall or snowfall. In mathematics, the non-central distribution of the correlation coefficient can be calculated. You can also calculate all kinds of probabilities using the Monte Carlo simulation. For companies, this simulation is very important, as it not only enables them to predict the likelihood of risks occurring, but can also improve production processes or administrative processes. Even gambling outcomes can thus be approximately forecasted. Process optimization: Monte Carlo simulation Excel (Image: Pixabay) Creation of a Monte Carlo simulation in Excel In the image gallery we have shown the procedure for creating a Monte Carlo simulation step by step based on a gambling outcome. The functions are indicated in parentheses. Gambling Home Simulation Excel Latest Videos In the first cell, in this case A1, enter the value 0. Then in the cell below, A2, create an if function with a random number. If the random number is greater than 0.5, then the value above should be added with 1, otherwise subtracted with 1. (= IF (RANDOM COUNT ()> 0.5, A1 + 1, A1-1)) 0.5, A1 +1; A1-1)) “> 0.5; A1 + 1; A1-1)) ” class = “Lazy Lazy – Async ” data-src = “https: // praxistipps-images .chip.de / yrYA69sjkhP430iqBxO3tGB9RS8 = / 620×349 / filters: format (jpeg) fill (000, true): no_upscale () / praxistipps.s3.amazonaws.com% 2Fmonte carlo simulation-in-excel-so-works- s_1.png “src = ” data: image / gif; base64, R0lGODlhAQABAIAAAP /// wAAACwAAAAAQABAAACAkQBADs = “> In the first cell, in this case A1, enter the value 0. Then in the cell below, A2, create an if function with a random number. If the random number is greater than 0.5, then the value above should be added with 1, otherwise subtracted with 1. (= IF (RANDOM COUNT ()> 0.5, A1 + 1, A1-1)) Copy this function from A2 Then you go to cell A1000. At the top left (as shown), tap A1000 and then press [SHIFT] + [Enter] to jump into the cell. To insert the function in all cells, go to the formula bar (there is the function) and press [STRG] + [Enter] .Then copy this function from A2 to into cell A1000. At the top left (as shown), tap A1000 and then press [SHIFT] + [Enter] to jump into the cell. To insert the function in all cells, go to the formula bar (there is the function) and press [STRG] + [Enter]. Next, calculate the average (= AVERAGE (A1: A1000)), the maximum loss (= MIN (A1: A1000)), the maximum gain (= MAX (A1: A1000)), the average deviation (= STDEV.N (A1: A1000)) and the Exit of the game (= A1000). The frame lines are only for clarity and are not necessary for the simulation. Next, calculate the average (= AVERAGE (A1: A1000)), the maximum loss (= MIN (A1: A1000)), the maximum gain (= MAX (A1: A1000)), the average deviation (= STDEV.N (A1: A1000)) and the output of the game (= A1000). The frame lines are for clarity only and are not necessary for the simulation. Now, create a what-if analysis. Highlight the area for the simulation and then go to the tab “Data” and there to “What-if-analysis”. Select the data table. Now create a what-if analysis. Highlight the area for the simulation and then go to the tab “Data” and there to “What-if-analysis”. Select the data table. Now you are asked from which row or column you have the values. You can leave the first field, that is, values ​​from line, in the second field, you can insert any cell that is not used. Excel only needs this value to temporarily cache the data. Now you are asked which row or column you have the values ​​from. You can leave the first field, that is, values ​​from line, in the second field, you can insert any cell that is not used. Excel only needs this value to temporarily cache the data. This completes what-if analysis. You are now seeing the outcome of 20 different games of chance. This completes what-if analysis. You are now seeing the outcome of 20 different games of chance. To make the results more visible, you can also conditionally format the values. Go to the “Start ” tab and then to “Conditional Formatting ” and select data bars there. To make the results more visible, you can also conditionally format the values. To do this, go to the “Start ” tab and then to “Conditional Formatting ” and select data bars. Using the “Count n ” function, you can still count how many times you won (= COUNTIF (H3 : H23; “> 0 “)) or lost (= COUNTIF (H3: H23; “0 “)) or lost (= COUNTIF (H3: H23; ”

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