I have had a lot of questions recently about the different abbreviations used in the groups, I had thought about this type of blog post for a while but it seems it is in demand sooner rather than later. It will most likely be a short post but hopefully nice and informative. It may even be something you can take a screenshot of to refer back to until they all become second nature.
I understand that sometimes even the meanings for the abbreviations can be confusing, so in this next short section I will explain what a few of the more difficult abbreviations are actually saying.
MAE (Maximum Adverse Excursion)
- This is a calculation to determine how far a trade goes against you before running to target. We can use this in a few ways:
- To determine if we can tighten our stops, e.g if we calculate that our MAE for daily hammers is 25% we know our stops are too big and we are potentially leaving a lot of profit on the table.
- To determine if we can cut a losing trade early. Just the same as the previous example, if we calculate that our MAE for daily hammers is 25% and a trade on this bias is running 60% in drawdown we may look for an exit signal as we have the evidence to suggest that most of our winners on this bias only trade about 25% of the way to our stop.
- The third way we can use this statistic to our advantage is that it may suggest our entries aren’t correct. If we have a MAE of 60% we know we are entering the right trades still but not in the right place. We can use this stat to identify this issue.
LHPB/LLPB (Last High Pre-Break/ Last Low Pre-Break)
When leaving a pending order (PO) in the market this must be from a naked level for many reasons that we won’t cover here but in-depth explanations of market structure is outlined in the Advanced Trader Course.
When we are trading from a level we will often opt for the ‘cheaper’ trade by bidding/offering the LHPB/LLPB instead of the level itself, however, we may sometimes trade from the level depending on confluence.
I hope you found this blog useful, until next week.