What is Take Profit?
A take profit order is an instruction to automatically close a position when the price reaches a specified level of profit, securing gains before the market can reverse.
Take Profit Explained
Take profit orders help traders avoid the common mistake of holding winning positions too long. Greed often causes traders to watch profits evaporate as they wait for even bigger gains. Setting a take profit target enforces discipline and removes emotion from the exit decision.
Real-World Example
You buy a stock at $50 and set a take profit at $60. When the price hits $60, your position is automatically sold, locking in a $10 per share profit regardless of what happens next.
Related Terms
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