Take-profit

Take-profit is a standing exit order placed at a price level in the profitable direction that automatically closes the position when the target is reached. Paired with a stop-loss, it fully defines a trade's risk-reward profile before the position is opened.

Reward-to-risk ratio (R:R):

R:R = (takeProfit - entry) / (entry - stopLoss)

A ratio of 2:1 means you stand to gain twice what you risk. This matters because even a win rate below 50% can produce a positive expectancy if the reward is large enough relative to the loss.

Example. Entry: $30,000. Stop-loss: $29,700 (risk $300). Take-profit: $30,900 (reward $900). R:R = 900 / 300 = 3:1. At a break-even win rate the strategy only needs to win 1 in 4 trades to cover its losses.

Common pitfalls:

• Moving the take-profit target higher after entry ("letting it run") invalidates the R:R you planned for.
• Placing the target at a round number without checking nearby liquidity or resistance.
• Ignoring the effect of fees and slippage on the net realized gain.

Setting take-profit and stop-loss levels together before entry is one of the simplest ways to enforce trading discipline and maintain a consistent edge.