Maximum adverse excursion
How far did a position move against its holder during the week, before the final result was known?
In plain words
Maximum adverse excursion is the largest move a position made against its holder at any point before it finished. For a long bought at the week's open, it is how far the price fell below that entry, measured at the worst moment, regardless of where the week ended.
Why it matters
A weekly gain can hide a large temporary loss. Maximum adverse excursion sizes the pain a holder had to sit through, which determines whether a position survives to the outcome or is closed, liquidated or stopped out before it can recover.
In a real week: ETH, week of 10 September 2018
For a long entered at ETH's open of 196.13 in the week of 10 September 2018, the week's low was 167.32 on Wednesday at 08:00 UTC, well below the entry, an adverse excursion suffered before the outcome was known. ETH then recovered: it closed at 220.17 on Sunday, a 12.26% weekly return, with the high of 227.42 reached Saturday at 17:00 UTC, after the low.
A common mistake
Judging a trade only by its ending return. Two positions with the same weekly gain can differ sharply in the drawdown each holder had to endure before getting there.