Trade management: partial exits, MFE/MAE and time stops

Calculate partial-exit R, cost-adjusted break-even, observed MFE and MAE, add-on risk and time stops using complete hypothetical trading ledgers.

Course outline

1. 1

   Calculate realized R after partial profit taking

   A 2R exit on a quarter of the position still left the whole trade at 0.625R gross. Weight each exit by its share, deduct fees and keep the original risk.

   8 min

   In short: Realized R = gross P&L across all exits ÷ original R, where 1R = initial quantity × entry-to-stop distance. Weight each exit's R multiple by its share of initial quantity: 0.25 × 1 + 0.25 × 2 + 0.50 × (−0.25) = 0.625R gross, not 2R, and 0.5996875R after fees.

2. 2

   Calculate break-even after a partial exit

   Separate an entry-price stop, the remaining position's break-even and whole-trade break-even. Include earlier partial profits and every fee paid.

   9 min

   In short: After a partial exit, three break-even prices differ: the entry-price stop, the residual units' break-even and the whole-trade break-even, which includes realized partial profit and all fees. In the example, entry is 100, whole-trade break-even 98.4337671 and residual break-even 100.3003003.

3. 3

   Measure MFE and MAE without inventing realized profit

   Maximum favorable excursion is not profit: an observed 20.40 USDT excursion ended as 3.598 USDT net. Measure MFE and MAE, then reconcile the actual exit.

   8 min

   In short: MFE and MAE are the largest unrealized gain and loss within a declared observation series: V_t = Q × (P_t − E), MFE = max(0, max V_t), MAE = max(0, −min V_t). They are not profit: a sampled MFE of 20.40 USDT ended as 3.598 USDT realized net.

4. 4

   Recalculate average entry and risk before adding to a position

   Size an addition from the combined position's stop: a 12 USDT budget permits 1.8 extra units, not two. Recalculate the average entry and don't spend risk twice.

   9 min

   In short: Size an addition from the whole position's risk: subtract the existing units' loss at the common stop from the budget, then divide by each added unit's loss plus fees, (12 − 4.398) ÷ 4.101, rounded down to 1.8 units. Average entry = (Q_old × E_old + Q_add × E_add) ÷ (Q_old + Q_add).

5. 5

   Define a time stop and signal expiry before entering

   Separate signal expiry, maximum holding time and order time in force. Reconcile the actual timed exit and execution delay under a rule fixed before entry.

   8 min

   In short: A time stop exits at the earlier of the signal expiry and the maximum holding time from the first fill, both fixed before entry. With expiry at 09:20 and 15 minutes from a 09:04 fill, the exit deadline is 09:19. Cancelling the entry order does not close the position.

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1. Calculate realized R after partial profit taking
2. Calculate break-even after a partial exit
3. Measure MFE and MAE without inventing realized profit
4. Recalculate average entry and risk before adding to a position
5. Define a time stop and signal expiry before entering

Educational material. Examples do not establish a profitable strategy. Trading costs, gaps and liquidation can produce losses beyond a planned stop.