Why Knowing Your Personal MAE and MFE Per Trade Are Critical for Scaling Your Trading Strategy

At the end of this post I will give my NQ trade strategy using my personal MAE and MFE statistics.

Trading is as much about managing risk as it is about finding profitable opportunities. Two metrics that often get overlooked but are absolutely crucial for developing robust scaling rules are Maximum Adverse Excursion (MAE) and Maximum Favorable Excursion (MFE). Let's dive into why these metrics matter and how they can transform your approach to position sizing.

Understanding MAE and MFE

Maximum Adverse Excursion (MAE) represents the largest loss a trade experiences before either being closed or turning profitable. Think of it as the "worst moment" of your trade. Similarly, Maximum Favorable Excursion (MFE) shows the highest potential profit a trade reaches before either being closed or turning against you – the "best moment" of your trade.

Why These Metrics Matter for Scaling

Knowing your typical MAE and MFE per trade isn't just about tracking performance – it's about understanding the true risk profile of your trading strategy. Here's why this knowledge is invaluable: