The take-profit (TP) is the mirror order of the stop-loss: it triggers automatic position closure when a favorable price level is hit, locking in gains without constant supervision.
Combined with the stop-loss, it defines the trade's risk/reward ratio: if your stop is -30 pips and TP is +60 pips, you aim for 1:2 R:R — willing to lose once to win twice.
Placement methods:
- Technical level: next resistance for a long, next support for a short, chart pattern projection (head-and-shoulders, flag...)
- ATR multiple: 2 or 3× Average True Range to adapt to volatility
- Fixed ratio: 1.5× or 2× the stop-loss distance (minimum 1:1.5 or 1:2 R:R)
- Partial take-profits: exit 50% at TP1 (1:1), let the rest run with a trailing stop targeting TP2 (1:3)
Classic beginner mistake: moving the take-profit further out when price approaches it, out of greed. This turns a near-certain gain into regret. Pros stick to their plan: TP set at entry, never moved (except for partial exits or trailing).