Take Profit (TP)
Also called: TP, profit target, target
A pre-set limit order that closes a winning trade automatically when price reaches your target.
Definition
Take Profit (TP) automates the exit on winning trades. Set when you open the position, it sits as a limit order on the opposite side and executes the moment price touches your target.
Used in tandem with a stop-loss, TP enforces the risk-reward you planned at entry. Without a TP, traders chronically exit winners too early or hold them into reversals.
Example
You buy EUR/USD at 1.0800 with a stop at 1.0780 (20-pip risk) and TP at 1.0840 (40-pip target). That's a 2:1 reward-to-risk plan.
FAQs
Should I always set a TP?
Most disciplined traders do, but trend-following systems sometimes prefer trailing stops with no fixed target, to let winners compound.