An order that automatically closes your winning trade at a predetermined profit level — your exit plan in advance.
A take profit is the mirror image of a stop loss. Instead of closing at a loss, it closes your trade when price hits your target profit level. Like the stop, you set it at entry — before emotions kick in.
Take profits matter because winning trades are psychologically harder to manage than losing ones. Without a pre-set target, traders watch a +50 pip win turn into +10, then to +0, then to a loss. A TP forces discipline: you planned the exit, now the exit happens automatically.
Targets should be placed at structural levels: the next resistance for longs, the next support for shorts. They should be at least 2x your stop distance (1:2 risk-reward minimum). If you can't find a target that far, the setup isn't worth taking.
Real trade example
Taking a short on USD/JPY at 150.50 with a 100-pip target at 149.50 during the BoJ intervention rumors in 2024. Set it and forget it — the trade hit the TP overnight while the trader slept.
Frequently asked about take profit
What is a take profit in trading?+
An order that automatically closes your winning trade at a predetermined profit level — your exit plan in advance.
When will I see take profit used in real trading?+
Every professional trade has a TP and SL set at entry. If you don't have one, you're trading on hope.
What is the most common mistake traders make with take profit?+
Setting the TP at a round number just because it's round. Markets don't care about round numbers — they care about structural levels. Your TP should be at the next support/resistance or trend line, not at "+50 pips."
What do experienced traders know about take profit that beginners don't?+
Consider using partial targets: close 50% at the first target, move stop to break-even, let the rest run to a further target. Locks in profit AND gives upside if the move continues.