TRADING GLOSSARY

Take profit: locking in gains at the right level

A take profit is a predetermined price level at which you close a winning trade to lock in profits. Like a stop loss, it is set when you enter the trade and executes automatically when the target price is reached.

How to set take profit levels

Take profit targets should be based on actual technical levels, not arbitrary numbers. Next resistance level (for longs) or next support level (for shorts). Fibonacci extension levels (127.2%, 161.8% of the prior swing). Measured move targets from chart patterns (the height of the pattern projected from the breakout). Round numbers where profit-taking tends to cluster.

Partial take profit

Many traders take partial profits at lower levels and let the remaining position run. For example: sell 50% at the first target (1:1 risk/reward), move the stop to breakeven, and let the remaining 50% target a higher level. This locks in some profit while giving the trade room to exceed expectations.

When not to use take profit

In strong, trending markets, fixed take profit orders can limit your upside. Consider using trailing stops instead, which allow profits to run while protecting against reversals. Some of the best trades move far beyond initial targets; an aggressive take profit can mean exiting a 500-pip winner at 100 pips.

AskTrade’s research reports provide specific take profit levels based on technical analysis and risk/reward optimization.

Disclaimer: This is for educational purposes only and does not constitute financial advice. Trading involves significant risk of loss.

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