The remark about hindsight is a very good remark. It is a trap for most 'newbies' in system design. The most important thing that can help you against hindsight is doing manual labor and going back in time, trade by trade with your rules of your system and market filters and only use the data that is then in front of you. Then you will see when it is indeed hindsight or not. Do not 'kid' yourself...
I see that I have had the equity chart up without the end capital adjustment of the first period... Here is the 'correct' one
Next step: using money management to meet your objectives. Here it is important to know what you want in terms of 'drawdown' and 'ROI'. If risking 1% of your capital in our example gives you during a monte carlo simulation a bigger drawdown then you want to endure, then you know you have to cut you risk. A monte carlo simulation on one system and one symbol is not realy a good way to judge if a system is good enough for you or not. But I need it to keep it simple to explain it. When you develop more systems that complete each other and more symbols to have more variation of your systems results, then you will have a more realistic monte carlo simulation to know what to expect in the future... Here i'm just showing that if you know what to expect, you can adjust your risk to meet your objectives... I hope this is clear enough... Questions?