Glossary
Take-profit order
A limit order placed at a target price to close a winning position automatically, often paired with a stop-loss in a bracket order.
On this page
A take-profit order closes a position once the price reaches a level where you planned to lock in a gain. For a long position it is a sell limit order above the current price; for a short position it is a buy limit below it. It puts the exit side of a plan into the market ahead of time, so a brief spike to your target is not missed while you are not watching.
How it works
Because it is a limit order, a take-profit fills only at the target or better. It rests on the order book until the price comes to it. Most traders pair it with a stop-loss in a bracket: the stop caps the downside, the take-profit caps the upside, and an OCO ("one cancels the other") link cancels whichever is left once the first one fills.
Trade-offs to weigh
A fixed target removes greed from the decision but also caps the trade: if the stock runs to $110, the order still sold at $88. Some traders take partial profits at the first target and manage the rest with a trailing stop. Targets are often set at the next resistance level or a multiple of the risk taken.
Watch the details. A take-profit sitting exactly at a round number may not fill if the price touches it but no buyer remains at that level. Limit orders can also execute in extended hours if marked to do so, at thinner liquidity, and a good-'til-canceled target left in place after you change your plan can close a position you meant to keep.