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Take profit

A pre-committed exit at a target price that locks in a winning trade.

A take-profit (TP) is the mirror image of a stop loss: a pre-set price above (for longs) or below (for shorts) entry where the position is closed at a profit. It is usually expressed in R-multiples — '2R' means a take-profit at 2× the distance from entry to stop.

Setting TP too tight caps winners and ruins expectancy; setting it too far gives back unrealized profits when price reverses. Many traders combine a partial TP at 1R (closing half the position, moving stop to breakeven on the rest) with a trailing stop on the runner.

Take-profit orders are typically implemented as limit orders, which means they only fill if price actually reaches the level. A limit order at TP can be skipped if price gaps past it intraday.

Formule

long: TP = entry + R · |entry − stop|
short: TP = entry − R · |entry − stop|

Exemple

Entry 50,000, stop 49,500 (distance 500), R = 2. Long TP = 50,000 + 2·500 = 51,000.

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