Why I Track Maximum Favorable Excursion

Maximum favorable excursion, or MFE, measures the greatest unrealized profit a trade reaches before it closes.

This can help me evaluate trade management.

For example, if many trades move substantially in my favor before giving back most of the move, my exit rules deserve a closer look.

But I shouldn't simply assume that every trade could have captured its highest unrealized profit.

The market never tells me in real time where the exact turning point will be.

MFE helps evaluate possible improvements; it doesn't guarantee better exits.