Your journal records how a trade ended. It forgets the path: how far price moved in your favour before you exited, and how far it moved against you before coming back. Those two numbers have names, MFE and MAE, and they answer two questions no other statistic asks.
- MFE, maximum favorable excursion: the best moment a trade had while it was open.
- MAE, maximum adverse excursion: its worst moment, the furthest price travelled against you.
- An MFE far above your result means you exit too early, repeatedly.
- An MAE far below your stop means your stop is too wide, so your size is too small.
Most traders review their trades as a series of outcomes: won, lost, by how much. That is a two-dimensional reading of a three-dimensional object, because it ignores entirely what happened between entry and exit. Yet that is exactly where the two most expensive, and most easily fixed, mistakes live.
MAE and MFE measure that path. They are two price distances, recorded over the life of the position, and they need no interpretation: either price travelled far in your favour or it did not. That factual quality is what makes them useful when everything else is open to debate.
Maximum adverse excursion: the MAE definition in trading
MAE, or maximum adverse excursion, is the greatest distance price travelled against your position while it was open. On a long, it is the gap between your entry and the lowest price printed before you exited. On a short, it is the gap to the highest. It is expressed in price points, in account currency, or as a multiple of your initial risk, the familiar R.
Reading it is immediate: a winning trade whose MAE came close to your stop was won narrowly, and nothing in your result shows that. Two trades returning the same amount can have opposite MAE values, one comfortable, the other on the edge. It is information about the quality of your entry, not about its outcome.
Maximum favorable excursion: the MFE definition in trading
MFE, or maximum favorable excursion, is the greatest distance price travelled in your favour during the life of the trade. It is the gain you would have booked by exiting at the single best moment, the one nobody ever catches but which serves as a reference.
The point is not to aim for that maximum, which would be absurd. The point is to measure the gap between it and what you actually took, and above all to see whether that gap repeats. An occasional gap is noise. A systematic gap is a behaviour, and behaviours can be corrected.
The two diagnoses MAE and MFE make possible
The first concerns your exits. If your average MFE is two to three times your average win, you are not short of good trades, you leave them too early. The cause is almost always the same: fear of watching a gain turn into a loss. That is fixed with a written exit rule rather than a decision taken in the moment.
The second concerns your stop. If your MAE stays well inside your stop across dozens of trades, your stop is wider than it needs to be. That does not mean tightening it blindly: it means you can tighten it and increase size at constant risk, which improves your result without changing your method at all.
| What you observe | What it means | What you change |
|---|---|---|
| MFE far above average win | You exit too early, repeatedly | A written exit rule |
| MAE far below the stop | Your stop is too wide | Tighten the stop, size up at constant risk |
| MAE near the stop on winners | Your entries are late | Revisit the entry trigger |
| MFE near zero on losers | The trade never worked | Check the validity of the signal |
The definitions in one table
The MAE MFE pair goes by several names depending on the platform, and the wording changes from one journal to the next. Here are the terms you will meet, and what each one covers.
| Term | Definition | Read in |
|---|---|---|
| MAE | Maximum adverse excursion: furthest price travelled against the position | Points, currency, R |
| MFE | Maximum favorable excursion: furthest price travelled in favour of the position | Points, currency, R |
| Max favorable excursion | Same as MFE, shortened form used by some platforms | Points, currency, R |
| Excursion | The distance travelled by price while the position was open | Points |
| R | One unit of initial risk, used to compare trades of different sizes | Multiple |
The maximum favorable excursion definition trading platforms use is identical across markets, and so is the maximum adverse excursion MAE definition trading tools apply: both are measured from your entry price, over the exact window the position stayed open. MAE trading analysis and MFE trading analysis are therefore the same operation run in two opposite directions.
Why these two numbers are missing from most journals
Because they are not in your broker statement. A statement gives entry, exit, fees and result. The path travelled in between is not there: it has to be pulled from price history, candle by candle, over the exact window your position was open.
That is why a spreadsheet cannot compute them without considerable work, and why many tools skip them. A journal that does not show them is not a bad journal, but it leaves you blind to two settings that cost real money and that are quick to fix.
Read them in R rather than in currency
Expressed in currency, MAE and MFE cannot be compared across trades, since sizes vary. Expressed in R, that is in multiples of the initial risk, they become comparable: an MFE of 3R means the trade offered three times what you risked, whatever the position size.
That normalisation enables the only analysis that really matters, the distribution. Are your MFE values all around 1R, or are there a few at 5R that you cut at 1? The second case is the more common, and it explains why so many traders with a decent win rate make nothing: they bank the small gains and let the big ones slip.
How Tradoshi computes MAE and MFE
Tradoshi computes them automatically for every trade, from minute candles covering exactly the life of the position, and returns them in three forms: as a price distance, in your account currency when the point value can be derived, and in R when the trade carries a stop loss. The result is cached per trade, so it is never recomputed.
They are then read alongside the rest: the trading dashboard to spot the patterns, and the trade-by-trade journal to understand a specific case. They make sense over dozens of positions, not three, and the sample size is displayed so you know what you are ruling on.
Frequently asked questions
Frequently asked questions
What is MAE in trading?
MAE stands for maximum adverse excursion. It is the greatest distance price travelled against your position while it was open, measured from your entry price. The maximum adverse excursion is expressed in price points, in account currency, or as a multiple of your initial risk.
What is MFE in trading?
MFE stands for maximum favorable excursion. It is the greatest distance price travelled in favour of your position before it closed, in other words the best result that trade could have produced had you exited at the highest point on a long, or the lowest on a short. That maximum favorable excursion definition holds across every market.
What is the point of comparing MAE and MFE?
Compared with each other and with your actual result, they separate two problems the result alone conflates: an exit problem, when MFE far exceeds what you took, and a stop placement problem, when MAE stays well inside it. Those call for two different corrections.
Is a high MAE necessarily bad?
No. A high MAE on a method that deliberately gives price room to breathe is normal. What matters is the comparison with your stop: an MAE that consistently brushes the stop on winning trades points to late entries, while an MAE that stays at half the stop points to a stop you can tighten.
Can you calculate MAE and MFE in a spreadsheet?
In theory yes, in practice with great difficulty: neither number appears in a broker statement. You have to retrieve minute price history over the exact window of each position, then extract the extremes. That is the work an automated journal does for you.
How many trades before these numbers are reliable?
They describe each trade individually from the first one, but they only serve as a diagnosis over dozens of positions. A gap between MFE and result observed across five trades is not a behaviour, it is a coincidence. Repetition is what turns the measurement into a decision.