Definition
What is Take profit?
A take profit is an order attached to a trade that closes it automatically when price reaches a chosen profit level.
A take profit locks in the result of a plan without needing you at the screen. Together with the stop loss it defines the full trade before it starts.
Targets are usually placed at a level where the market is likely to react, such as a previous high or low, and checked against the stop distance to get a sensible risk-reward ratio.
Some traders take partial profits at a first target and let the rest run; the key is that the plan is decided before entry, not changed out of fear.
Example
Example: you sell EURUSD at 1.0850 with a stop at 1.0870 (20 pips) and a take profit at 1.0810 (40 pips). With 0.25 lot ($2.50 per pip) you risk $50 to make $100.
At a prop firm
At Axora Funded a phase is passed on balance, so profit only counts towards the target once the trade is closed, by the take profit or manually.
Frequently asked questions
Should every trade have a take profit?
Not always: trend-following traders may trail a stop instead. But every trade needs a plan for where to exit.
Does a take profit guarantee the price?
A take profit is a limit order, so it fills at its price or better when the market reaches it.