Take profit
Also called: TP, Take profit order, Profit target, Target price, Kâr al, Kâr hedefi
A take profit closes your position at a target you chose in advance; the target comes from the next level on the chart, not from what you hope for.
4 min read · one puzzle on the page
Calculate: Risk/reward ratio calculatorWhat is a take profit order?
A take profit (TP) is an order that closes your position in profit when price reaches a set level. It's the other end of the stop loss: the stop marks the price where the idea is wrong, the take profit marks the price where the idea has done its job.
On a buy it sits above entry, on a sell below. It works like a limit order: if price reaches your level it fills there or better. You don't expect slippage against you as with a stop, but if price comes within a pip of your level and turns, the order never fills.
Its real value is that you set it before entering. With the target known, you know how many R you're playing for. A trade without a target has no risk-reward ratio, only a hope.
Where does the target go?
Where the chart says: the next level where price can genuinely stall. In a range, that's the opposite edge. In a trend, it can be the previous high or low, a supply or demand zone, or a round number everyone watches.
An example. GBP/USD has been swinging between 1.2600 and 1.2700. Price drops to the lower edge and turns with a lower wick. If you're thinking of buying, the stop goes under support and the wick, at 1.2585. Entry 1.2610 means 25 pips of risk. The target is the upper edge, but not exactly 1.2700, since sellers often step in a little early. You set it at 1.2690: 80 pips of reward, about 1:3.2.
Buy the same range from the middle, at 1.2650, and the stop still has to go under the lower edge at 1.2585: 65 pips of risk. The target doesn't move, 1.2690, so 40 pips. The ratio falls below 1:1. Because the target comes from the chart, it also tells you whether your entry is any good.
If another level sits in between, the target goes in front of it. Drawing the target behind resistance because you want 1:3 gives you a target that looks fine on paper and rarely gets hit.
Try it on a chart
Price is moving back and forth inside a range on this chart, with both edges drawn. Look at which edge price is near right now; before deciding, measure where your target and stop would land if you entered and how many R the trade would be worth.
Price has been going back and forth in the same range for a while; now it has climbed to the upper edge and the candle turned with an upper wick. What do you do?
No sign-up needed. Take a guess; when the chart opens, you'll see why.
The most common take profit mistake
Changing the target while the trade is open. As price nears the target you want more and push the order further away; price turns at the level and the profit becomes breakeven or a loss. The plan was made calmly before entry. A new decision made as price approaches the target usually comes from greed.
The opposite happens too: closing early at the first sign of profit. Risk 25 pips and take 10 often enough and your average win falls below your average loss. Then even a high win rate slowly drains the account.
And setting the target by multiplication. A rule like "2R on every trade" ignores resistance sitting 1.5R away. Find the level first, then see how many R it's worth. If it isn't worth even 1R, the problem is the entry, not the target, and Wait is often the best answer.
The limits of a fixed target
In strong trends a fixed target can miss most of the move. If price breaks the previous high and keeps going, you're already out. That's why some traders close part of the position at the target and trail the rest.
A fill isn't guaranteed. If price turns two pips short of your target, nothing happens. The spread matters too: most platforms chart only the bid, while a sell position closes at the ask. So on a sell, a candle can appear to touch your target while the order is still short by the spread.
Around news, levels lose their meaning for a moment. Price can blow through your target and run much further; your order fills and you miss the rest. There's no fix for that, and it isn't a mistake. If the plan was built on a level, exiting at that level is the plan.
Frequently asked questions
How do you calculate take profit?
Place the stop where the idea is invalid and measure its distance from entry; that's 1R. Then find the next level where price can stall and put the target slightly in front of it. Divide the distance from entry to target by 1R to see how many R the trade is worth. Entry 1.2610, stop 1.2585 and target 1.2690 give 25 pips of risk, 80 of reward, about 1:3.2.
What should the take profit to stop loss ratio be?
There's no ratio that suits everyone. The ratio sets how often you need to be right: break-even takes 50 percent at 1:1, about 33 percent at 1:2 and 25 percent at 1:3. But you don't pick the ratio, the chart gives it to you. The stop comes from structure and the target from the next level. If the result is poor, waiting beats forcing the trade.
Should you move your take profit during a trade?
Only if the chart gives you new information. If price has built a level you didn't expect, or major data is coming, pulling the target closer can make sense. Pushing it further because price is getting close usually means following emotion, not the plan. Before changing it, ask whether you'd have made the same call when you entered.
