http://trading-journal-spreadsheet.com/faqs/mfe-mae-bso/ The above article explains MFE and MAE, but doesn't really address how BSO is computed. I understand the concept.....BSO is the best theoretical exit one could have obtained in the trade. I've also seen where the best trades are where the MFE and BSO are the same....but that doesn't make sense. In that case, it appears BSO is always zero and when MFE=0, then the exit was perfect. Can someone comment on this ?
It is a good theoretical concept stressing on letting your winners run so one can squeeze more profits out of a position. You know how we human traders get excited by even looking at a small profit. I think its natural because profit isn't yours until the trade is closed, and loss is all yours even if the trade is open. The article is telling you to keep closing trades as you move towards your target. Again, no body knows that target for certain. So don't over think it, just scale our positions as you move towards your target profit. MFE, BSO, MAE... these are all book terms to make you understand the concept behind such trading methodology.
While I am on the subject, is anyone using this particular journal which is built in Excel ? Comments on it ? To me, I am worried I will have to enter the trade information manually....ughh. I've asked the author if there is an import facility or whether it can be customized to have one.