Take profit
A pre-set order that closes a position at a chosen objective, taking the gain automatically.
Full explanation
A take profit is an exit order placed at the level where you intend to bank the trade. Like a stop loss, it should be based on structure — the opposite range edge, the next key level, a measured objective — rather than a round monetary amount.
Setting it in advance removes the hardest decision from the moment it is hardest to make. Traders who improvise exits tend to close winners early and let losers run, which inverts the maths that makes a strategy work.
Objectives must be realistic for the conditions. A target beyond the pair''s typical daily range, or beyond the range edge in a sideways market, is unlikely to be reached however good the analysis.
Why traders watch it
Exits determine results as much as entries do. A defined objective is also what makes a risk-to-reward ratio calculable before the trade.
The Trading Plan describes realistic conditions for the day — expected volatility, range structure, event risk — so your objectives match the market rather than your hopes.
Trading considerations
- Base the objective on a level price must actually reach, not a monetary wish.
- Compare the objective with the pair's typical daily range before committing.
- If the objective sits beyond a risk window, decide in advance how you will handle it.
Educational guidance only — never a trading signal or recommendation.
Related indicators
Confirmation
Observable evidence, defined in advance, that a setup is doing what you expected before you commit.
Drawdown
Drawdown is the fall from an account's peak value to its subsequent low, expressed in money or as a percentage. It measures the pain of a losing run rather than the final result. A 20% drawdown needs a 25% gain to recover, and the deeper it goes the harder recovery becomes, which is why controlling drawdown matters more than chasing returns.
Entry
The point at which you open a position — chosen in advance, with a defined trigger and invalidation.
Risk-controlled plan
A plan where the loss on every trade, and for the day as a whole, is decided before the market opens.
Risk-to-reward ratio
The comparison of what you stand to lose against what you stand to gain on a trade, calculated before entry.
Stop loss
A pre-set order that closes a position once price proves the idea wrong, capping the loss.