Take-Profit Order
In short
An order to sell when price reaches your target — locks in gains automatically
A take-profit order is the opposite of a stop-loss: it automatically sells when the price reaches your target level. If you buy at $100 and set a take-profit at $130, the platform sells for you when the price hits $130 — no need to watch the screen all day.
Take-profit orders become market orders when the target price is reached. For long positions, TP must be above the current price. Combined with stop-loss, they form an OCO (one-cancels-other) bracket — whichever triggers first executes and cancels the other. This lets you define both your downside limit and upside target when entering a position.
Formula
Potential Gain = Take Profit Price - Entry PriceRelated concepts
- Trailing Stop — A trailing stop follows your stock's price upward. If the stock rises from $100 to $150, a 15% trailing stop moves from $85 to $127.50. If the price then drops to $127.50, it triggers a sell — locking in a $27.50 profit instead of riding it back down. The stop only moves UP, never down.
- Stop-Loss Order — A stop-loss is a standing order that says 'if this stock drops to $X, sell it automatically.' It's your safety net — it limits how much you can lose on any single position. Set it when you buy, and if the market turns against you, the stop-loss fires before things get worse.
- Risk Tolerance — Risk tolerance is how well you can sleep when your portfolio drops 30%. Some investors can stay the course; others panic-sell. High risk tolerance = more stocks. Low risk tolerance = more bonds and defensive assets.