A take profit (TP) order automatically closes your position when the price reaches your predetermined profit target, locking in gains.
How It Works
- Buy EUR/USD at 1.0850
- Set take profit at 1.0950 (100 pips)
- When price reaches 1.0950 → position closes
- Profit locked: 100 pips
Take Profit vs. Stop Loss
| Take Profit | Stop Loss | |
|---|---|---|
| Purpose | Lock in profit | Limit loss |
| Trigger | Price reaches target | Price hits risk level |
| Placement | Above entry (buy) | Below entry (buy) |
Setting Take Profit Levels
1. Fixed Pips
- TP at X pips from entry
- Simple and mechanical
2. Risk-Reward Ratio
- If SL is 50 pips, TP at 100 pips (1:2 R/R)
- Ensures profitable system with >33% win rate
3. Technical Levels
- Previous resistance/support
- Fibonacci extensions
- Round numbers
Key Points
- Always set TP before entering (part of your plan)
- Don’t get greedy — a closed profit is real money
- Consider partial take profits (close 50% at TP1, rest trails)
- Combine with trailing stop for maximum gains