Risk
What is Take-profit?
By the verify.trading team · Last reviewed · How we write
A take-profit is an order that closes a trade automatically when price reaches your target, locking in the gain.
Key points
- Defines the reward side of the trade.
- Pairs with a stop-loss to set risk to reward.
- A distant target is a lower-probability target.
Take-profit explained
Together with a stop-loss it defines the reward and the risk of a trade before you enter, which is what makes a risk to reward ratio possible to calculate.
Targets are placed at levels where price has a reason to pause, such as prior highs and lows. A target that is very far away pays well on paper but is less likely to be reached.
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