Take profit order
Family II · Orders
Not to be confused with take profit, take profit trader, take profit stop loss.
Take profit order is an exit instruction that closes an open position once the market reaches a price specified in advance. It is normally placed at the same time as the entry order, together with a stop loss, so that the trade has both a defined target and a defined maximum loss. The order rests with the broker or platform until the target price is touched, at which point it is executed as a market or limit order depending on the venue.
How it works
A take profit is a conditional order, not an immediate one. It becomes active only when the quoted price reaches the trigger level, and the direction of the position determines which side of the market the trigger sits on.
- On a long position, the take profit is placed above the current market price.
- On a short position, it is placed below the current market price.
- If the price never reaches the trigger, the order expires unexecuted or remains pending until the position is closed manually.
Some venues treat the trigger as a limit instruction, filling only at the trigger price or better; others convert it to a market order once triggered, which can produce slippage in fast conditions. The exact behaviour is set by the broker and the order type chosen.
Worked example
The same arithmetic applies in reverse for a short: the trigger sits below the entry and the gain accrues as the price falls toward it.
Placement and adjustment
A take profit can be set when the position is opened or added afterwards, and it can be moved closer to or further from the market while the position remains open. Moving it further away increases the potential gain but also the time and risk exposure; moving it closer reduces both. Whether a take profit can be modified, cancelled or partially filled depends on the instrument and the venue's rules, and some markets restrict such orders during illiquid periods.
Often confused with
- take profit
- The unhyphenated form is the concept or target level itself, whereas the order is the instruction that acts on it; the visible sign is whether the text names an instruction to close or merely a price objective.
- take profit trader
- A take profit trader is a person who consistently exits at predefined targets, while a take profit order is the mechanism used; the visible sign is that one refers to a market participant and the other to an instruction.
- take profit stop loss
- A take profit stop loss is a paired order setup in which a take profit order closes a position at a target profit and a stop loss order closes it at a predetermined loss, both attached to the same open trade.