Monte Carlo simulations are based on Monte Carlo methods. Monte Carlo method refers to a method of solving sets of equations using an algorithm dependent on repeated random sampling. The Monte Carlo method is used in the process of simulating (approximating) a system. Monte Carlo methods are computational algorithms that rely on repeated random sampling to compute their results. Monte Carlo simulation involves repeated random sampling from input distributions and subsequent calculation of a set of sample values for the output distributions with the repeating of the process over several iterations.

The term Monte Carlo method was used in the 1940s in the more rapid solving of equations and algorithms possible on the first electronic digital computer, the ENIAC computer. The term was used by Nicholas ...