MAE and MFE in gold trading
MAE is the furthest a gold trade moved against you before closing; MFE is the furthest it moved in your favor. Together they show if stops and targets fit.
Also called Maximum adverse excursion, Maximum favorable excursion, Heat
MAE (maximum adverse excursion) is the largest open loss a trade showed during its life. MFE (maximum favorable excursion) is the largest open profit. Both are measured from entry and usually recorded in dollars or in R.
How it applies to gold trading
Recording MAE and MFE in a journal answers questions that win rate cannot. If most winning gold trades never went more than $3 against you, a $10 stop may be wider than needed. If many losing trades first reached +1.5R before reversing, your targets may be too far or you may benefit from a partial close. If winners regularly show MAE close to the full stop, your entries are early and the stop is barely surviving noise.
Many platforms do not show these figures directly, but you can read them from the chart after each trade or export tick data. Some journal tools calculate them automatically.
Worked example
Example (hypothetical numbers): over 40 gold trades with a $6 stop, winners had an average MAE of $2.10 and 90% never exceeded $4. Losers reached an average MFE of $5.50 before reversing. A trader might test a $4.50 stop with larger size, and a partial close at +$5, then compare expectancy with the original rules.
A common mistake
Tightening stops from MAE data without testing. Smaller stops increase the number of losers; only a backtest or forward test shows whether expectancy improves.
See also: Trading journal, Stop-loss, Partial close, R multiple.
Frequently asked questions
How do I measure MAE on a gold trade?
Note the worst price reached while the trade was open, subtract it from entry for a long (or the reverse for a short), and express it in dollars or as a fraction of your stop.
What is a good MAE?
There is no universal figure. What matters is the pattern: if winners rarely use more than half the stop, the stop may be wider than needed.