CAE is crucial for traders as it helps optimize capital usage by identifying inefficiencies in allocation strategies. High CAE values indicate effective capital deployment yielding strong returns, while lower values suggest suboptimal usage. By analyzing CAE, traders can improve risk-reward ratios, refine position sizing, and ensure capital is directed towards the most profitable opportunities. It also aids in comparing different trading strategies and their capital efficiency over time. Understanding CAE can help traders enhance portfolio resilience and overall profitability.