Chart Reporter

Why does candle resolution matter when reviewing MAE and MFE?

By Chart Reporter Reviewed 2 min read

The short answer

MAE and MFE describe the largest adverse and favourable moves observed during a trade under the available data. Candle resolution and coverage determine what can be reconstructed. A candle's high and low do not establish the exact intrabar order of price movements.

Define the observation window

Maximum adverse excursion concerns the move against the position before exit; maximum favourable excursion concerns the move in its favour. Both need a defined entry, exit and price path. Check the selected instrument, trade direction and available capture before interpreting the numbers.

A price continuing in your favour after you closed is a different observation from pre-exit MFE. Mixing the two can make an exit appear worse by using information outside the trade's actual holding window. Keep post-exit context explicitly labelled when discussing alternative management.

Respect what a bar cannot reveal

A candle can show that both a high and low occurred within its interval without telling you their exact order. If a stop and target lie inside that same bar, the bar alone does not settle which would have been reached first. Coarser intervals make this ambiguity more consequential.

Chart Reporter replay uses captured broker candles and may show coarser supported history when finer data is unavailable. That provides useful context, but it does not create missing fine-grained observations. Read gap and coverage notices before assuming the reconstructed path is complete.

Turn excursions into bounded review questions

Ask what the available data supports: whether the position endured a substantial adverse move, how much favourable movement was observed before exit, or which trades lack enough evidence for the calculation. Preserve eligible counts rather than silently treating missing excursions as zero.

Counterfactual stop or exit studies need assumptions about ordering, fills and behaviour. An observed later high does not prove you could or would have exited there. Use excursion patterns to develop a testable review hypothesis, document the resolution and sample, and avoid presenting a historical maximum as an attainable future trade outcome.

Sources and further reading

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