Take Profit
A take-profit order automatically closes an open position once the price reaches a target you set, locking in the gain without you having to watch the market. It is the counterpart of a stop-loss, which limits losses.
How a take-profit order works
You set a target price when you open a trade or afterwards. For a long position the target sits above your entry; for a short position it sits below. When the market reaches that level, the exchange closes the position for you.
Depending on the platform, the take-profit executes as a limit order at your target or as a market order once the target is touched. A limit order protects the price but might not be filled if the market only briefly reaches the level. A market order fills reliably but can suffer slippage.
An example
Say you buy 1 ETH at 2,000 dollars and decide in advance that you would be satisfied with a 10% gain. You place a take-profit at 2,200 dollars and a stop-loss at 1,900 dollars. If the price reaches 2,200 dollars first, the position closes with a gain of about 200 dollars before fees. If it falls to 1,900 dollars first, the stop-loss closes it with a loss of about 100 dollars. Your potential reward is twice your risk, a risk-reward ratio of 2:1.
Why traders use it
Take-profit orders remove the need to watch charts all day and help you stick to a plan made with a calm head. Without one, many traders hold on hoping for more, and a winning trade can turn into a losing one.
Some traders scale out, placing several take-profit levels so that part of a position closes at each target.
Limits and common mistakes
A take-profit caps your gain on that position. If the price keeps rising after you exit, you do not benefit. Targets set too close to the entry may be hit by normal price noise, while targets set far away may never be reached.
In fast markets, gaps and slippage can make your actual exit price differ from your target. A filled take-profit can also be a taxable event in many countries.
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Frequently asked questions
What is the difference between take profit and stop loss?
A take-profit closes a position at a favourable price to secure a gain, while a stop-loss closes it at an unfavourable price to limit a loss. Many traders use both on the same position.
Does a take-profit order always execute at my price?
Not always. If it is a market order, slippage can change the fill price; if it is a limit order, it may not fill at all when the price only touches the level briefly.
Can I use take profit on spot trades?
Yes. On spot markets you can usually set a limit sell order above your purchase price, and many platforms offer combined take-profit and stop-loss orders.
Related terms
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