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Just like a stop-loss order, a take-profit order is an order type where your broker will automatically close a position when price reaches a predetermined level.

A take-profit order is an order type designed to control your reward as a trader.

For example, if you open a long position and the price spikes, you can set a predetermined take-profit order in which your broker will automatically close your position once this higher price has been reached, maximising your profits.  

The take-profit order saves you from having to watch the markets non-stop, 24 hours a day, guaranteeing the maximisation of profit on a specific trade. 

Take-profit orders can be attached and edited whilst an order is still open, or you can attach a stop-loss order before you open a position (recommended).

take profit order

 

Let’s take a look at an example of where you would set a take-profit order on a new position.

 

EXAMPLE 1

Setting a take-profit order (long position)

You want to open a long position at the current price, with your maximum reward being a profit of $1,000.

Below are the rest of details of the trade you plan on opening:

 

Currency PairEUR:USD
Volume5 mini lots
PIP Value$5 per PIP
Current Price1.13011
Long or Short position?Long position

 

To work out where you should place your take-profit order, you must first divide your maximum reward ($1,000) by the PIP value ($5 per PIP) = 200 PIPs

So, you must place your take-profit order 200 PIPs above the current price:

1.13011 + 200 (PIPs) = 1.15011

 

As you are opening a long position, the take-profit order is placed above the current price.

 

EXAMPLE 2

Setting a take-profit order (short position)

You want to open a short position, with your maximum reward being a profit of £500.

Below are the rest of details of the trade you plan on opening:

 

Currency PairEUR:GBP
Volume1 standard lot
PIP Value£10 per PIP
Current Price0.86157
Long or Short position?Short position

 

To work out where you should place your take-profit order, first you must divide your maximum reward (£500) by the PIP value (£10 per PIP) = 50 PIPs

So, you must place your take-profit order 50 PIPs below the current price:


0.86157 – 50 (PIPs) = 0.85657

 

As you are opening a sell or short position, the stop-loss order is placed below the current price.

 

 

How to set a take-profit order for a NEW position

 

Step 1:

Firstly, you must create an order by left clicking ‘New Order‘.

New Order 1

Your screen should look like below

New Order Popup 1

Step 2:

Manually fill in the desired take-profit order price.


For example, we want our take-profit at ‘1.21057’.

 

So, we enter this price into the ‘Take Profit‘ field, then click the ‘Buy by Market‘ button.

 

You can tell that we want to open a long position as we placed our take-profit order above the current price.

Add Take Profit Price

You can see the active take-profit circled below

Take Profit Placed

How to set a take-profit order for an ACTIVE position

 

Step 1:

Have a look at your active trades at the bottom of your screen.

Active Trades 1

Step 2:

Right-click on the trade that you would like to add (or edit) a take-profit order to.

A pop-up menu will open, then left-click on ‘Modify or Delete‘.

Modify or Delete 1

Step 3:

Manually enter the price of the take-profit order that you wish to add.
For example, here we have added ‘1.20912

Once you have filled in your desired take-profit, click ‘Modify‘ at the bottom.

Modify Take Profit

Once you have modified your order, you can see your active trade with it’s newly added take-profit at the bottom of your screen

Take Profit Modified

BONUS:

You can always adjust your take-profit by dragging the red line on the chart.

For example, on the screenshot below we are changing our take-profit from ‘1.20912’ to ‘1.20272’ by dragging the red line downwards.

Drag To Change Take Profit

LESSON SUMMARY:

– Just like a stop-loss order, a take-profit order is an order type where your broker will automatically close a position when price reaches a predetermined level.

– A take-profit order is an order type designed to control your reward as a trader.

Lesson tags: free forex course
Back to: Free Forex Course > Step 3 - Using Different Order Types
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