Take profit (T/P) definition
Take profit (T/P)
A take profit is an order type that automatically closes the trade when the price reaches a prespecified point. By closing the trade when the price has risen to a specific point, take profits prevent your trade from losing the gains it’s made if the market turns.
Take profit example
Suppose you open a long trade with the expectation that the asset’s price will rise in your favor. In the case of a breakout, you expect the price to rise 15%. Because you can’t constantly monitor your trade, you place a take-profit order that is 15% higher than the current market price.
Once the price reaches that level, it will automatically sell to lock in your profits. In conjunction with a take-profit order, you may set a stop-loss order 5% below the current price to prevent your trade from outsized losses if the trade moves against you.