What is MFE in trading?

Maximum Favourable Excursion is the furthest a trade moved in your favour before it closed, measured from your entry. Expressed in R, an MFE of +3.4R means the trade was at one point worth 3.4 times your initial risk.

What is MAE in trading?

Maximum Adverse Excursion is the furthest a trade moved against you before it resolved. An MAE of −0.9R on a winner means the trade nearly hit your stop before working.

How do I know if my stop is too tight?

Look at the MAE of your winners. If most winners show an MAE beyond −0.7R, your stop is sitting inside normal noise and small stop widenings will convert stop-outs into winners. If winners rarely go past −0.3R, your stop is likely wider than it needs to be.

How do I know if my targets are wrong?

Compare average MFE with your average realised R. A large gap means you are exiting well before the move ends. If MFE rarely reaches your target, the target is beyond what the setup delivers and should be cut back.

Guide

How to track MFE and MAE in R

Entry quality is what traders talk about. Exit quality is what pays. MFE and MAE are the two numbers that let you audit exits with evidence instead of opinion.

Definitions, in R

Record both excursions relative to the risk you defined at entry, not in currency or pips. Doing it in R makes a gold trade and an index trade directly comparable.

risk       = |entry − first stop|
MFE (R)    = best price in your favour, distance from entry ÷ risk
MAE (R)    = worst price against you, distance from entry ÷ risk
realised R = (exit − entry) ÷ risk        (long; invert for short)
efficiency = realised R ÷ MFE

Exit efficiency is the payoff metric: it tells you what share of the move that was available you actually captured.

How to capture it without extra work

You do not need tick data. When you close a trade, glance at the chart and note the extreme in each direction — one number each. Every trade in Simple Trading Journal has optional Max MFE (R) and Max MAE (R) fields for exactly this, and it takes about five seconds per trade.

Give it 30–50 trades per strategy before drawing conclusions. Below that, you are reading noise.

Reading the patterns

MFE and MAE patterns and what to do about them
What you see	What it means	What to change
Winners with MAE beyond −0.8R	Stop sits inside normal noise	Widen the stop slightly and reduce size to keep risk constant
Losers with MFE above +1.5R	Giving back good trades	Add a partial at 1R or move to break-even after 1R
Average MFE far above realised R	Cutting winners early	Hold to a structural target instead of a feeling
MFE rarely reaches target	Target beyond the setup's range	Shorten targets; recheck the break-even win rate

Change one variable at a time and re-measure over the next block of trades. Adjusting stop width, target distance and entry timing simultaneously guarantees you will not know which change helped.

Frequently asked questions

What is MFE in trading?: Maximum Favourable Excursion is the furthest a trade moved in your favour before it closed, measured from your entry. Expressed in R, an MFE of +3.4R means the trade was at one point worth 3.4 times your initial risk.
What is MAE in trading?: Maximum Adverse Excursion is the furthest a trade moved against you before it resolved. An MAE of −0.9R on a winner means the trade nearly hit your stop before working.
How do I know if my stop is too tight?: Look at the MAE of your winners. If most winners show an MAE beyond −0.7R, your stop is sitting inside normal noise and small stop widenings will convert stop-outs into winners. If winners rarely go past −0.3R, your stop is likely wider than it needs to be.
How do I know if my targets are wrong?: Compare average MFE with your average realised R. A large gap means you are exiting well before the move ends. If MFE rarely reaches your target, the target is beyond what the setup delivers and should be cut back.

Stop guessing. Start journaling.

Log a trade from a chart screenshot in seconds. Free plan forever, Pro from €5/month.