Take profit
A take profit is an order that closes a trade once it reaches a target gain. It fixes the reward side of the trade in advance.
How Take profit is calculated
Targets are often set as a multiple of the risk: a target of 2R sits at entry + 2 x (entry - stop). They can also be a fixed percent, a prior high, or a trailing exit that follows price. A limit order at the target fills only if price trades there.
How it is read
A fixed target cuts winners at a known size. A trailing exit lets a winner run but gives back some of the gain before it exits.
Common mistakes
- Setting the target where you hope price goes, not where the data says it reaches.
- Raising the win rate with a close target while the losses stay large.
- Assuming a limit target always fills. Price can touch it and reverse without filling you.
Test it yourself
Set a target percent in the exit section. When a stop and a target are both hit in one daily bar, the Lab assumes the stop was hit first. The Lab charges trading costs on every trade, fills on the next day's open, and shows how many attempts you have made.
What Tickfloor tested
Tickfloor has not published a backtest of a rule built only on Take profit. It describes or manages something rather than giving a signal, so there is no strategy to score. It still shapes how any tested rule should be read.
Lessons that cover it
Related concepts
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.