Take Profit (ตั้งจุดทำกำไร)
Take Profit is an order that automatically closes your trade when the price reaches a profit level you chose in advance.
A Take Profit (often written TP) is a pending instruction you attach to a trade. When the market price reaches the level you set, your broker's platform closes the trade automatically and the profit is locked in. You do not need to be watching the screen at that moment.
Take Profit is the partner of the Stop Loss. Stop Loss closes a trade at a set price to limit a loss, and Take Profit closes it at a set price to collect a gain.
Example
Suppose EURUSD is trading at 1.1000 and you buy, expecting the price to rise. You set:
- Take Profit at 1.1050
- Stop Loss at 1.0975
If the price rises to 1.1050, the trade closes with a gain of 50 pips. If it falls to 1.0975 first, the trade closes with a loss of 25 pips. Here the possible gain is twice the possible loss, which is a 2:1 reward-to-risk ratio.
For a sell trade, the Take Profit is placed below the entry price, because you profit when the price falls.
Why it matters
Take Profit helps you stick to a plan made with a calm mind, instead of deciding in the heat of the moment. It also helps you avoid greed, such as holding on until a winning trade turns into a losing one.
Common beginner mistakes
- Setting the target at a random level without any reason, such as no link to past price levels.
- Setting it so close that the profit is small compared with the risk, or so far that the price rarely gets there.
- Moving the Take Profit further away again and again.
No Take Profit level guarantees the price will reach it.