Take profit
A take profit is an automatic profit-taking exit level, set before entering a position, which locks in the gain when price reaches the intended target.
The take profit is the mirror of the stop loss: an exit order placed at the profit target, which closes the position as soon as price reaches it : usually as a limit order. Its value is twofold: it books the profit without depending on a decision made in the emotion of the moment, and it makes the trade fully defined from entry, with a known risk (the stop) and a known objective (the take profit).
Choosing your target
A relevant target leans on market structure: a resistance, a prior high, an Ichimoku cloud boundary, a measured extension of the move. The distance from entry to take profit, compared with the distance from entry to stop loss, forms the trade's risk/reward ratio : the parameter that, together with the win rate, determines whether the strategy has positive expectancy. In Screener.Trading's paper trading, you can materialise your targets as limit orders and check under simulated conditions whether your take profits are actually reached before your stops.
A common compromise is to close part of the position at the take profit and let the rest run with a raised stop: profit secured, potential preserved.
Keep exploring
- FeaturePaper trading: learn in real conditions, without the riskPlace orders, manage positions and track your P&L on fully virtual accounts : real trading practice with zero real money at stake.
- FeatureThe backtesting tool built into your screenersBacktests built from your screeners: entries, exits, fees and full metrics to judge a strategy on numbers instead of gut feeling.
- GlossaryStop lossA stop loss is an automatic loss-taking exit level, set before entering a position, which caps each trade's risk at a predetermined amount.
- GlossaryRisk/reward ratioThe risk/reward ratio compares a trade's targeted gain with its accepted loss, and together with the win rate determines whether a strategy has positive expectancy.
- GlossaryLimit orderA limit order is an order executed only at the price you set, or better, prioritising price control over certainty of execution.
- GuideThe complete beginner's guide to tradingEverything you need to understand before placing your first order: reading a chart, choosing your style, using the right indicators, managing risk, and practicing without risking a cent.