What Is Maximum Favorable Excursion (MFE)?
MFE is the furthest a trade moved in your favour before it closed. Comparing it to where you actually exited reveals how much profit you routinely leave on the table.
Maximum Favorable Excursion (MFE) is the best unrealised profit a trade reached while it was open — the furthest it ran in your favour before you exited. Measured in R, it is the mirror image of MAE: MAE is the heat, MFE is the opportunity.
Why it matters
The gap between a trade's MFE and where you actually closed is profit you saw but did not keep. A trade that peaked at +3R and closed at +1R left 2R behind. Do that repeatedly and your exits, not your entries, are capping your results.
A worked example
| Trade | MFE (peak) | Exit | Left behind |
|---|---|---|---|
| A | +3.0R | +1.0R | 2.0R |
| B | +1.2R | +1.0R | 0.2R |
| C | +2.5R | +2.3R | 0.2R |
Trade A captured only a third of its move. If that is a habit, the fix is in how you exit, not how you enter.
What the patterns tell you
- Winners with high MFE but small exits — you are cutting profits early; consider a trailing stop or a partial-exit plan.
- Losers with high MFE — trades that were nicely green turned red. A break-even stop after a set gain could rescue some of them.
- Exits close to MFE — your exit discipline is strong; you are keeping most of what the market offers.
How to use it
Track MFE and MAE together. Adverse excursion tunes your stops; favourable excursion tunes your targets. Between them they describe the whole life of a trade, not just its final number.
Educational content only. Tracktions is a trade-journaling and analytics tool, not investment advice — we are not SEBI-registered advisers and do not provide trade recommendations, tips, or assurances of returns.