# Monte Carlo Simulation

*Quant & Pricing — Finicade finance glossary*

Pricing something by simulating thousands of random future paths and averaging the payoff. Slow but flexible, it's the go-to when a derivative is too complex for a neat formula.

**Also known as:** monte carlo, simulation

**Related terms:** [Brownian Motion](https://finicade.com/glossary/brownian-motion), [Risk-Neutral Pricing](https://finicade.com/glossary/risk-neutral-pricing), [Value at Risk (VaR)](https://finicade.com/glossary/value-at-risk)

**Taught in:** Hull Street — Exotic Options

Source: https://finicade.com/glossary/monte-carlo