Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Often it's worthwhile monitoring where a trade went after you exited to determine whether your system could be improved. This is particularly useful if you're relatively new to the system. However, that is not MFE as it's usually defined. But it would be MFE if your system was defined differently so that you were in the trade until that different point.
The question is how do you define favorable or adverse? Is favorable the the highest point before a pullback of more than X percent or is it the highest point price reached before a trade would have come back to your Breakeven?
MFE: Favorable: For trades that ultimately become losers, this shows you the closest your trade came to reaching your profit target. So if your PT was 6 ticks and your SL was 6 ticks, and at some point during the life of the trade you were positive 4 ticks, but then the trade turned against you and you ultimately lost 6 ticks, your MFE would show 4 ticks positive. For winners, this stat isn't as useful because the MFE = the profit target. 6 ticks in the example. What is interesting is seeing how close to your PT you got during your losers.
MAE: Adverse: Same logic but backward: For winning trades, how far against you did your trade ever get. This will be a value close to your SL, but ultimately not = to your SL.
Does this help?
Ian
In the analytical world there is no such thing as art, there is only the science you know and the science you don't know. Characterizing the science you don't know as "art" is a fools game.
You wouldn't consider how far Beyond your target price went ie. potential profit to be your MFE? If I that on average price goes 10 ticks past my target MFE= target+ 10 tics therefore I should consider moving my target by 5 tics.
