We report on results of a Monte Carlo simulation that uses traveling‐wave equations for the optical field of mode‐locked diode lasers. The model includes effects of the spontaneous emission, the linewidth enhancement factor, and nonlinear gain. The results of the simulation agree with experimental observations such as the sublinear power versus current characteristics. According to this model the reduced power is a result of combined large‐signal effects. We propose to incorporate a frequency shifter into the cavity to improve the pulse energy and the use of available bandwidth.