Take-Profit Definition – What is Take-Profit? | CFI

take-profit

Take-profit (t/p) and stop-loss (s/l) orders are widely used as trading risk management techniques. The point at which you are willing to sell a stock and take the profit on your trade position is called a take-profit point.

 

For example, let us say that there has been a large move upward, and the price is nearing a key [resistance level]. You may want to sell before the price reaches a period of consolidation and set your take-profit appropriately.

 

On the other hand, a [stop-loss] is a point at which you are willing to sell a trade asset at a loss when price action does not move in your favor. These points help you limit further losses on your trade position by cutting them earlier before they escalate.

 

For example, if the price breaks below a key support level, you may want to sell by setting your stop-loss point slightly below support to nip the losses in the bud.

 

You can use both trend lines and moving averages to determine key support and resistance levels based on past price action so that you can determine the best points to place your stop-loss or take-profit either below and/or above support and resistance.

 

Key takeaways:

  • The point at which you are willing to sell a stock and take the profit on your trade position is called a take-profit point.
  • Take-profit (t/p) and stop-loss (s/l) orders are widely used as trading risk management techniques.
  • Plan the trade and set take-profit and stop-loss points appropriately.
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We would like to remind that while we endeavour to provide best possible services, CFI provides execution only services and any information, reports, opinions, commentary or other materials he receives from CFI directly or from its employees or through any analytical tools provided to him or third party research provided to him from the Company shall not be deemed as investment advice and it cannot be relied upon to make investment decisions. The Client commits to make his own research and from external sources as well to make any investment. The Client accepts that CFI will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The contents of any report provided should not be construed as an express or implied promise, as a guarantee or implication that clients will profit from the strategies herein, or as a guarantee that losses in connection therewith can, or will be limited.


Forex and CFDs are leveraged products that incur a high level of risk and a small adverse market movement may expose the client to lose the entire invested capital. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The possibility exists that you could sustain a loss in excess of your deposited funds even if a stop loss is used and therefore, you should not speculate with capital that you cannot afford to lose and be aware of trading risks. Credit Financier Invest (Mauritius) Ltd provides general information that does not take into account your objectives, financial situation or needs. The content of this website must not be interpreted as personal advice. Please ensure that you understand the risks involved and seek independent advice if necessary.

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