What is Take Profit?

A take profit order is a predetermined price level at which a trader plans to exit a profitable position. It automatically closes the position when the price reaches the target level, securing profits without requiring manual intervention.

Implementation Methods

Fixed Take Profit

• Set at specific price level
• Clear profit objective
• Suitable for range-bound markets
• Often used with risk-reward ratios

Scaled Take Profit

• Multiple exit levels
• Partial position closing
• Maximizes trending moves
• Reduces timing pressure

Strategy Considerations

Setting Levels

• Technical resistance points
• Fibonacci extensions
• Risk-reward ratios
• Historical price levels
• Volatility measures

Common Approaches

• Reward:Risk ratios (2:1, 3:1)
• Previous swing highs/lows
• Round number levels
• Trend-based targets

Related Terms

• Stop Loss
• Order Types
• Risk Management
• Trading Strategy