This code snippet demonstrates how to calculate and utilize the Maximum Favorable Excursion (MFE) to dynamically set take profit levels in a trading strategy using the ProBuilder language. The MFE measures the maximum potential profit for a trade from the entry point to the closing point.

defparam cumulateorders=false //dummy strategy
if rsi[14] crosses over 50 then
  buy at market
endif

set stop ploss 50

//increase the array index
if not longonmarket and longonmarket[1] then
  index=index+1
endif

//compute the MFE
if longonmarket then
  mfe = max(mfe,high-tradeprice)
  $mfeArray[index] = mae
endif

//at least 10 orders to allow the average calculation
if isset($mfeArray[2]) then
  sum=0
  for i = 0 to index do
    sum=sum+$mfeArray[i]
  next
  avg = sum/index
endif

graph avg

if avg>0 then
  set target profit avg
else
  set target pprofit 200
endif

Explanation of the Code:

• Line 1: Disables order accumulation to treat each order independently.
• Lines 2-4: A buy order is placed if the 14-period RSI crosses over 50.
• Line 6: Sets a stop loss of 50 points.
• Lines 8-10: Manages an index for tracking the number of trades.
• Lines 12-15: Calculates the MFE for an open position and stores it in an array. MFE is the maximum profit observed from the entry price to the current high.
• Lines 17-23: Checks if there are at least 10 entries in the MFE array to start calculating the average MFE. It then calculates the average MFE from the array values.
• Line 25: Plots the average MFE on the chart for visualization.
• Lines 27-30: Sets the dynamic take profit level based on the average MFE if it’s greater than zero; otherwise, it defaults to a take profit of 200 points.

This snippet is useful for traders looking to implement a dynamic take profit strategy based on historical performance of their trades, adjusting their exit points to optimize potential gains.