A take profit (TP) is an order type used by traders to close a position once a specified profit level is reached. Generally, this order is set at a price level that is favorable compared to the entry point. By setting a TP order, traders aim to secure gains without having to monitor the market constantly. When the market price reaches the predetermined take profit level, the order is executed automatically, thereby taking the profit without further intervention.
Take profit orders are often used in combination with stop-loss orders to manage risk and protect against adverse price movements. In many markets, using such strategies can help traders adhere to their trading plans and discipline.