MFE is very useful because it can help you see if you are doing any of the following:

• Letting your trades run longer than they should
• Not locking in profits quickly enough
• Setting your profit targets too far away

For example, this trade was stopped out shortly after entry. But the trade was in profit for some time before getting stopped out. The MFE is marked on the chart below.

If this happens to you a lot, then you should consider setting your profit target a little closer to your entry to capture more profits.

But MFE only measures your missed profit, while your trade was open.

That’s very useful, but it’s only half of the story.

 

Definition of MaxR

For example, you may have initially been happy with the result of the trade below because it hit your take profit quickly.

But upon later review, you notice that you missed out on a ton of profit.

This was the MaxR on the trade. The “R” stands for Multiple of Risk or the result of the trade, relative to your stop loss.

The MFE on this trade would have been 100% because it hit the profit target. MFE is a good stat to track, but it doesn’t tell you how much profit you are missing out on after you close the trade.

MaxR gives you this vital information. In this example the missed profits were quite significant.

Now there’s a reason why most trading journal platforms don’t include this information.

MaxR can be very subjective, so it’s hard to calculate automatically.