MAE, or Maximum Adverse Excursion, is the largest unrealized loss a trade reached at any point during its lifetime, measured from the entry price to the worst price the trade traveled to before it was closed. It is recorded for every trade — winners and losers alike — and captures how far the market moved against the position before the trader exited or the price recovered. Unlike final P&L, MAE shows the heat the trade actually took.
Formula
For a long trade:
MAE = Entry Price − Lowest Price Reached During Trade
For a short trade:
MAE = Highest Price Reached During Trade − Entry Price
The result is usually expressed in pips, points, or dollars. A winning trade can still have a large MAE if it dipped deeply against you before reversing.
Worked example
You buy GBPUSD at 1.2700 with a stop at 1.2650. The price drops to 1.2670 before reversing and hitting your target at 1.2750.
MAE = 1.2700 − 1.2670 = 30 pips against Final result: +50 pips winner, but with 30 pips of MAE
That MAE figure says you came within 20 pips of being stopped out. Distribute MAE across all your winners and you discover how often your wins were near-misses.
Why it matters
High average MAE on winning trades means your stops are placed too tight or your entries are poorly timed — you are routinely on the wrong side of price before the trade works. Plotting MAE distribution against final P&L reveals whether tighter stops would actually filter out losers or just cut winners early. The AI coach uses MAE histograms to suggest stop placement adjustments per setup type.
Common pitfalls
MAE requires tick-level or at least minute-level data to be accurate. Calculating MAE from end-of-day candles understates it badly. Also, MAE on trades that hit the stop equals the stop distance — those data points should be excluded when analyzing whether stops are too tight, because by definition they could not have gone further adverse.