Take Profit

A take-profit is the other half of the plan: the price where you get paid. It can be a limit order at a target, a scale-out at several targets, or a rule such as "exit at the close of the session." Without it, the only exit is the stop or a mood. Targets usually come from the chart. The next level, the measured move, the far side of the range, a volatility multiple. A target in empty space, a round number with no level, is weaker than a target at resistance. It can still be right as a place you are willing to be flat. The purpose of the order is to make the decision before the green bar is on the screen.

Place the target so the net reward, after costs and a realistic fill, is large enough relative to the stop to justify the win rate you actually have. A 1-to-1 target needs you to be right often. A 3-to-1 target can survive more losers and will be reached less often. Both are coherent. What is not coherent is moving the target farther after the trade starts because the bar looks strong, and then watching it come back to the entry. If you want runners, plan a partial at the first target and a trail on the rest. That is a written two-exit system.

Put the take-profit where a rational opposing order sits: into the high of the range if you bought the low, into the extension if you bought a breakout and the extension meets a higher-timeframe level. If price approaches the target and stalls, the planned exit is still the exit. Cancelling it to catch the last bit is how planned winners turn into breakeven trades. Review, in the journal, the trades that would have paid the original target and did not because you cancelled it. That list is usually expensive.

Setting the target at a multiple you like, 2R, with no level anywhere near it, and then being puzzled when price reverses at the actual level short of the multiple. Also taking profit at a tick because of anxiety, which silently replaces your system's payoff with a smaller one. And placing the target inside the spread or inside the noise of the entry, so the trade cannot pay its costs.

A limit at the high of the bar often does not fill. Backtests that assume a touch of the target is a fill are optimistic, especially if the target is the exact high of a wick. Require a trade-through or accept that some targets will be missed. A take-profit also does nothing for a gap in your favour that opens beyond it. You will get a better price, which is fine, or the platform will fill you at the limit and give the rest away, which you should understand before it happens.