What is Take-profit?
In short
A level or order that closes the position to lock in profit when price reaches the target.
Also known as: TP, target, maqsad
A take-profit (TP) is the target price you set before entering a trade: when price reaches it, the position is closed and the profit is locked in. At a broker it is usually placed as a limit order: for a long position, a sell order sitting above the current price.
The target is not picked at random. It is usually placed near the next resistance level, a prior high or an ATR-based expected move. Crucially, the TP together with the stop-loss gives you the R:R ratio: the further the target is relative to the stop, the more the trade is "worth it" — but the lower the chance of reaching it.
Why set it in advance
When price is rising, greed says "it will go higher"; when it is falling, fear says "I'll lose my profit". A pre-set TP separates the plan from emotion and lets you compare the result with the plan in your journal.
Limitations
A TP caps the profit: in a strong trend price can run far past the target. That is why some traders scale out — closing half at the TP and putting a trailing stop on the rest. Also, a limit order only fills if price actually reaches it; a move that turns one cent short of the target pays nothing.
You can read the R:R straight away: 1.5R to TP1, 3R to TP2. The numbers are illustrative.
Example
An illustrative stock: entry $80, stop $76, take-profit $88, 25 shares.
- Risk: ($80 − $76) × 25 = $100.
- Potential profit: ($88 − $80) × 25 = $200.
- R:R = $8 ÷ $4 = 1:2.
If the stock opens at $90 the next day (a gap up), the $88 limit sell fills at $88 or better — i.e. around $90, for a profit of 25 × $10 = $250. You can check the numbers with the risk/reward calculator.
Mistakes and tips
Set the TP from the chart, not from money: think "the next resistance is at $88", not "I want to make $200".
Don't push the TP further away mid-trade without a reason — it changes your R:R and often turns a winning trade into a loser.
Place the target slightly below resistance rather than exactly on it: price often turns before touching the level.
Place the stop and TP together right after entry (for example as an OCO order) so you don't have to sit at the screen.
Frequently asked questions
- Where should I put my take-profit?
- Usually near the next resistance, a prior high or the typical move range. If that spot gives at least 1:1.5–1:2 relative to your stop, the trade is worth considering.
- Can I trade without a take-profit?
- Yes — some traders exit only with a trailing stop. But without a clear exit plan emotions make the decision, so beginners are usually better off setting a target in advance.
Learn it in the Academy
This term is covered with hands-on examples and a quiz in these lessons of the interactive course.
- How the US market worksExchanges and brokers, sessions in Tashkent time, spread and liquidity, five order types with examples, T+1, costs and fractional shares.Open lesson · 12 min
- R:R — risk/reward ratioR units, the win rate you need, expectancy and profit factor with numbers; how partial exits change R and how to set realistic targets.Open lesson · 11 min
- Trading journal: learning from your own statisticsWhat to record, tagging setups, computing win rate, expectancy and profit factor, and finding where the money leaks out.Open lesson · 12 min
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