A level where you bank the gain:take-profit closes, sun or rain.
An order attached to a position to close it when the price reaches a specified level in the trader’s favour.
It works as a limit order, so it fills at the chosen price or better, but only if the market actually trades there.
In plain words
A take profit is an instruction attached to a position to close it when the price reaches a chosen level in the trader’s favour. For a position that was bought it sits above the current price; for one that was sold, below.
See it move
Price has crossed Take profit: Position closes
Why it matters
It lets a target be set in advance, so the position closes without the trader watching. It is a limit order, so it fills at the chosen price or better, but only if the market actually trades there.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
A trader buys one standard lot of EUR/USD at 1.1000 with a take profit at 1.1080.
- 1Distance to the target1.1080 − 1.1000 = 80 pips.
- 2Gain if filled80 × 10 US dollars = 800 US dollars.
- 3If the selling price peaks at 1.1078 and turns back, the order is not triggered.
The position closes with a gain of 800 US dollars only if the selling price reaches 1.1080; a rise that stops 2 pips short leaves it open.
A common mistake
Setting a take profit does not make the gain likely. It is filled only if the price gets there, and a bought position is closed at the bid, the lower of the two quoted prices, so a chart may appear to touch the level without the order filling.
Check yourself
Learn more
- Academy lessonThe risk-reward ratioHow the risk-reward ratio and expectancy are calculated, the break-even win rate each ratio implies, and the mistakes that quietly change the ratio.
- Academy lessonTesting a set of rulesFour steps with this site’s own tools: describe a rule, test it on invented prices, see what position size does, and record real decisions. And what such a test cannot show.
- ExplainerFibonacci extensions: how the levels are calculatedExtensions project a prior swing beyond its end using the same ratios as retracements. A worked EUR/USD example shows where each level comes from.
Educational information, not investment advice or a recommendation to trade.