The technical state of tracking test is determined through parameter of dynamic target. Tracking performance data is varied for different model of photoelectric theodolite. So the parameter design of dynamic target is different when test tracking performance of photoelectric theodolite is different. This paper describes coordinate conversion between photoelectric theodolite and dynamic target, and gives the method for building simulation model to find optimal target parameter. And the method is proved to be fit to track performance data by testing some dynamic target with the simulation model.