Take Profit
Also known as: TP, Target
An automated order designed to close a position once it reaches a specific level of profit.
Plain-English Meaning
A take profit order is your predefined goal post. It tells the broker, "If the price reaches this favorable target, cash me out automatically." This allows traders to secure their gains without having to watch the screen constantly.
Why It Matters
Markets can move quickly. A price might hit your target for just a few seconds before reversing. A take profit order ensures you capture that intended value objectively, without letting greed delay the exit.
Simple Example
You enter a long position on Gold at $2,000 and place a Take Profit at $2,050. When the market hits $2,050, your broker automatically closes the trade, locking the positive return into your account balance.
This educational example uses selected assumptions for reference calculation purposes. Real conditions may vary by broker, exchange, or instrument.
Beginner Mistake
Setting an unrealistic take profit target based on how much money is desired, rather than what the market structure or average daily volatility suggests is actually achievable.