MAE and MFE (Maximum Adverse and Favourable Excursion)

What MAE and MFE mean

MAE (maximum adverse excursion) is the largest distance price moved against an open trade. MFE (maximum favourable excursion) is the largest distance price moved in the trade's favour. Both are measured from the entry price, between opening and closing the position.

A trade's final result tells you only where it ended. MAE and MFE show what happened while it was open: how much drawdown you sat through and how much open profit was available at the best point.

Formal definition

For a position opened at entry price E and closed at price C, with price path P(t) during the life of the trade:

The values can be expressed in pips or points, in account currency, or as a multiple of the initial risk (the "R" method, where R is the distance from entry to stop-loss). If price never moves against the trade, MAE is zero. The same applies to MFE if price never moves in its favour.

Worked example (hypothetical)

A trader buys EURUSD at entry price E. The stop-loss sits a distance S below entry.

1. Soon after entry, price falls to a low L, which is above the stop. The trade is still open. MAE = E − L.
2. Price then rises to a high H. MFE = H − E.
3. Price falls back and the trader closes at C, which is above E. The realised gain is C − E.

The result is a winning trade, but it gave back part of the open profit: the gap between MFE and the realised gain is H − C. To turn pip distances into money for your lot size, use the pip value tools on the calculators page.

Collected over many trades, these values let traders check two things. They can see whether stops sit closer than the usual adverse move, and whether exits regularly give back much of the available MFE.

Edge cases experienced traders should know

• Bid and ask. A long position closes at the bid and a short position closes at the ask. Measure the excursion on the price your position would actually close at. Otherwise the spread distorts MAE.
• Bar data vs tick data. On candle data you cannot tell whether the high or the low came first within a bar. Tick data gives exact values.
• Gaps and slippage. A gap can push MAE beyond the stop distance.
• Scaling in or out. With several entries or partial closes, you need to define the reference price, for example the average entry price.
• Hindsight. MFE is never fully capturable in real trading. Treat it as a description of past trades, not a target.

Where you see the terms

• Backtest reports: strategy testers, including the MetaTrader 5 tester, can show MFE and MAE distribution charts against trade profit.
• Trade journals and analytics software, often next to the equity curve and drawdown statistics.
• Trading books and strategy research. News articles rarely use the terms.

Past excursions do not predict future ones. Leveraged CFD and forex trading can lose money fast, and a trade's adverse move can exceed what any earlier sample showed.

Related terms

• Risk management
• Exposure
• Average daily range
• Fat tails and tail risk
• Trading psychology
• Trading strategies
• Trading glossary

Frequent questions

Is MAE the same as drawdown?

No. MAE is the worst open loss of a single trade. Drawdown usually describes the fall of the whole account or equity curve from a peak.

Can MAE be larger than my stop-loss distance?

Yes, if price gaps or slips past the stop before the order is filled.

Should I measure MAE and MFE in pips or in money?

Pips or points let you compare trades of different sizes. Money shows the actual impact on the account. R multiples let you compare trades that had different stop distances.

Does a high MFE mean the strategy is good?

Not by itself. It shows that open profit was available. Whether a strategy works depends on realised results, costs and risk across a large sample of trades.