What Is a Take-Profit Order?
A take-profit (TP) order automatically closes your position when price reaches a specified profit target. For a long position, it's a sell order above your entry. For a short position, it's a buy order below your entry. It removes the emotional decision of "when to sell" by pre-committing to an exit level.
How Take-Profit Works
Place your TP at a price level where you expect selling pressure (for longs) — typically at resistance levels, Fibonacci extensions, or round numbers. Many traders use scaled take-profits: closing 33% at target 1, 33% at target 2, and trailing the remaining 34% — locking in profit while maintaining exposure to further upside.
Why It Matters for Traders
Without a take-profit plan, winning trades often turn into losing trades as greed takes over. A systematic TP approach — always taking some profit at predefined levels — ensures you capture gains consistently. Combined with a stop-loss, take-profit orders define the complete R:R (risk-reward) structure of every trade.