Two metrics separate serious traders from hobbyists, and almost no retail tool surfaces them: MAE (Maximum Adverse Excursion) and MFE (Maximum Favourable Excursion).
What is MAE?
Maximum Adverse Excursion = the deepest unrealised loss your position hit before you exited. If you entered at ₹1,500, the price went down to ₹1,470, then bounced back and you exited at ₹1,550 — your trade was a winner, but your MAE was ₹30.
Why it matters: if you place stops at ₹1,450 (₹50 risk), but your average MAE on winners is only ₹15, your stop is 3× too wide. Tightening stops to ₹1,475 would barely cost any winners and would massively reduce your average loss.
What is MFE?
Maximum Favourable Excursion = the highest unrealised profit your position hit before you exited. If you entered at ₹1,500, price ran to ₹1,620, then dropped and you exited at ₹1,540 — your MFE was ₹120 but you only captured ₹40.
Why it matters: a low capture ratio (realised ÷ MFE) screams "you exit winners too early." The most common leak in retail trading. If average MFE is 2.4R but average capture is 0.8R — you're leaving 67% on the table.
How to use MAE + MFE together
- →Average MAE on winners < average MAE on losers → your strategy has predictive edge
- →Average MAE on winners > average MAE on losers → you're randomly stopping out winners
- →Capture ratio < 0.6 → tighten exit rules or use trailing stops
- →MAE on losers >> stop loss distance → you're moving stops
QbarTrade auto-calculates MAE and MFE on every connected-broker trade. AI Coach surfaces capture-ratio breaks weekly.
Plan trades, connect 30+ brokers, get a weekly AI Coach report. Free for founder users.