Adverse Excursion

Adverse Excursion (also known as Maximum Adverse Excursion or MAE) is a risk management concept that measures the worst-case loss that an open trading position experiences before it either reaches its profit target or is closed. Developed by John Sweeney, MAE analysis helps traders optimise their stop-loss placement by studying how far a trade typically moves against them before eventually recovering and hitting the target. By analysing historical MAE data, quantitative traders can set more informed stop-loss levels to avoid being prematurely stopped out.