A take-profit is an instruction you set in advance: when the price reaches this level, close my trade and bank the profit. You do not have to watch the screen, and you do not have to decide in the heat of the moment whether to hold on. The order fires automatically at the level you chose, which is exactly why it is useful.
What it is
A take-profit (often "TP") is a resting order attached to an open position, placed at a price better than your entry. For a buy, it sits above the entry; for a sell, below. When the market touches it, the position closes for a profit and the order is done. It is the profit-side twin of the stop-loss, which closes a trade at a loss to cap the damage.
Take-profit vs stop-loss
They are mirror images, and most trades carry both:
- Take-profit — closes the trade in profit at your target. Defines the reward.
- Stop-loss — closes the trade at a loss before it grows. Defines the risk. See what is a stop-loss.
One caps your upside on purpose; the other caps your downside. Set together, they turn a trade into a defined bet: you know the most you can win and the most you can lose before you enter.
How it ties to risk-reward
The distance to your take-profit versus the distance to your stop-loss is your risk-reward ratio. Risk 50 pips to make 100 and you have a 2:1 trade — the reward is twice the risk. That ratio, paired with how often you win, is what decides whether a strategy makes money over time. A take-profit set too close may lift your win rate but shrink each reward until the maths stops working. Full detail in what is a risk-reward ratio.
A worked example
You buy GBP/USD at 1.2700 on 0.10 lots. You place a stop-loss at 1.2650 (50 pips of risk) and a take-profit at 1.2800 (100 pips of reward) — a clean 2:1.
- Price hits 1.2800: the take-profit closes you for +100 pips, about $100, roughly £78.
- Price hits 1.2650 first: the stop-loss closes you for −50 pips, about $50, roughly £39.
You risked £39 to make £78, decided before the trade opened. Win one of every three of these and you are still ahead. That is the point of setting the target in advance rather than guessing on the day.
A take-profit removes one specific mistake: watching a winner, hoping for more, then giving it all back when the market turns. The trade-off is that you will sometimes close early and watch it run further. That is the price of not having to call the top.
Why it matters
For EA traders the take-profit is usually built into the strategy, and its distance is a design choice you can inspect. An EA with a tiny take-profit and a huge stop-loss can show a lovely win rate while quietly risking far more than it makes per trade — a classic way for weak systems to look strong. Knowing where the TP sits relative to the stop tells you what the EA is really doing.
The Karnek note
Karnek shows the take-profit and stop-loss on your live trades, read straight from the terminal, so you can check the risk-reward your EA is actually using rather than the one it advertised. It is read-only and can never move a target or close a position.
More in The Basics of Trading →
Written and reviewed by the Karnek Research team. Last updated August 2026.
Educational content only - not financial advice. Past performance does not predict future results. Trading carries significant risk.