A take profit order automatically closes an open order when the price reaches a specified threshold.
It is an order used by currency traders to automatically close their position once a certain profit has been made.
Although it halts any further advance in profit, it guarantees a specific profit after a level has been hit.
Take-profit orders are used to lock-in profits.
For example, if you are long USD/JPY at 110. 50 and you want to take your profit when the rate reaches 111.00, you will set this rate as your take-profit level.
If the bid price touches 111.00, the open position is closed automatically securing your profit.
Trades are closed at the current market rate, but in a fast-moving market, there may be a gap between this and the take-profit rate you had set.
If this article seems useful for your then please click the like button below. You can also share your valuable feedback or ask questions in the below comment section. Also, subscribe to our newsletter for trading-related updates.