Take-profit order
Also called: take profit · TP
Definition
A take-profit order is an order that automatically closes all or part of your position when the price reaches a target level, locking in gains without you having to watch the market.
How take-profit order works
For a long position, the take-profit sits above your entry; for a short, below it. When the trigger is hit, the exchange closes the position with a market or limit order. On futures, take-profit and stop-loss can often be attached to the position directly when you open it.
Take-profit targets help you follow a plan instead of reacting to emotion. Many traders set targets at previous highs, resistance levels or a multiple of their risk, such as two or three times the distance to their stop-loss. Some scale out, closing half at a first target and the rest at a second.
The trade-off is that a take-profit caps your upside on that portion if the price keeps running. In fast markets, a market-triggered take-profit can fill slightly differently from the trigger, and a limit take-profit might be skipped if the price spikes through and reverses.
Example
Suppose you buy 1 ETH at 2,000 USDT with a stop-loss at 1,900, risking 100 USDT. You set two take-profits: half at 2,200 and half at 2,300. If ETH reaches 2,200, you lock in 100 USDT on the first 0.5 ETH. If it then reaches 2,300, the second half adds 150 USDT, for a total of 250 USDT before fees, a reward of 2.5 times the 100 USDT you risked.
Common mistakes
- Setting take-profit targets so close that fees and spread eat most of the gain.
- Removing a take-profit during a rally out of greed, then watching the price fall back.
- Forgetting that a full take-profit closes the whole position, leaving no exposure if the trend continues.
Learn and practise
FAQ
How do I set a take-profit?
Choose a target based on your analysis, such as a resistance level or a risk multiple, and attach the order when you open the position or add it afterwards.
Should I use take-profit and stop-loss together?
Many traders do, so both outcomes are planned. Some exchanges let you link them as an OCO order, where one cancels the other.
What is TP in crypto trading?
TP is short for take-profit, the price where you plan to close a position with a gain.