What Is a Take Profit? Locking In Gains With a Plan

A take profit is an order that automatically closes a position once the price reaches a target level you’ve set, locking in gains without you needing to watch the trade closely.

How it works

Just like a stop loss caps your downside, a take profit defines your upside target. Once the market reaches that price, the trade closes automatically and the profit is secured — even if the price later reverses.

Why set it in advance

Deciding your profit target before entering a trade removes a common emotional trap: holding on too long out of greed, hoping for “just a bit more,” only to watch a winning trade turn into a losing one. A pre-set take profit enforces discipline.

Pairing it with risk-reward

Take profit levels are usually set in relation to the stop loss distance, expressed as a risk-reward ratio — for example, risking 20 pips to target 40 pips is a 1:2 ratio. See our risk-reward ratio guide for more detail on choosing sensible targets.

Partial take profits

Some traders close only part of a position at a first target and let the rest run with a trailing stop, aiming to capture more of a strong trend while still locking in some profit early.

Key takeaway

A take profit is the mirror image of a stop loss: it turns your exit plan into something automatic and unemotional, rather than a decision made in the heat of the moment.