Take-Profit

A take-profit order works symmetrically to a stop-loss: instead of exiting at a loss threshold, it exits at a profit target. When used together, stop-loss and take-profit define the trade's risk/reward ratio before the position is opened.

Risk/reward ratio compares the potential loss (distance from entry to stop-loss) against the potential gain (distance from entry to take-profit). Many risk frameworks recommend seeking trades with a risk/reward ratio of at least 1:2 or 1:3 — accepting a small loss for a larger potential gain.

Setting take-profit levels requires analysis of where the trade's logic naturally ends: resistance levels (for long trades), prior swing highs, round numbers, or projection-based targets from chart patterns. Arbitrary take-profit levels often result in exits that are too early or too late.

Partial profit-taking — closing a portion of the position at the first target and letting the remainder run — is a common approach to capturing gains while preserving exposure to a larger move.

Not every strategy requires a fixed take-profit: trend-following strategies may use trailing stops instead, exiting when momentum reverses rather than at a pre-set price. The right approach depends on your strategy and the market conditions.