Start with one setup
Group trades by playbook setup first. If profitable trades in one setup often survive 0.6R of MAE before working, a 0.3R stop may be too tight for that specific setup.
Guide
Use MAE and MFE to review stops, targets, and exits with evidence.
MAE is maximum adverse excursion: how far a trade moved against you after entry. MFE is maximum favorable excursion: how much profit the trade offered before exit. Together they show whether the problem is the entry, stop, target, or exit discipline.
Define MAE and MFE in R
Review by setup, not all trades
Separate stop problems from exit problems
Adjust rules only after enough samples
Read MFE as exit feedback
If many trades reach 2R MFE but close near 1R, the data points to exit discipline, target placement, or trailing rules. It does not automatically mean the setup is weak.
Use a sample rule
Do not rewrite a playbook from five trades. Wait for a repeated pattern across 20 or more similar trades, then change one rule and track the next sample separately.
Common questions
What is MAE in trading?
MAE means maximum adverse excursion. It measures the worst open drawdown after entry before the trade closed, often expressed in R or account risk.
What is MFE in trading?
MFE means maximum favorable excursion. It measures the best open profit the trade reached before exit, which helps review targets and early exits.
How do MAE and MFE improve trade review?
They separate entry, stop, and exit decisions. MAE helps test whether stops fit the setup, while MFE shows whether exits captured enough of the available move.
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