What is a take-profit order?

A take-profit order is an automatic order placed with your broker to close a trade once the price reaches a specified level of profit. It’s essentially a tool for locking in profits and ensuring that you capture gains when the market moves in your favor. The take-profit order is typically used alongside a stop-loss order to create a balanced risk-to-reward ratio.

Key Characteristics of a Take-Profit Order:

• Automatic Exit: The take-profit order automatically closes your position at the target price you set, ensuring you lock in profits without needing to constantly monitor the market.
  
• Risk Management: It helps traders to stick to their trading plan and not get swayed by short-term market fluctuations, ensuring that profits are captured at desired levels.
  
• Profit Target: You can set your take-profit price based on your analysis and trading strategy. It’s used when you predict the price will move a certain amount in your favor and you want to secure the profits at that point.
  

Example of Using a Take-Profit Order:

Let’s consider the following scenario using Apple Inc. (AAPL):
1. Market Situation: You decide to buy AAPL at $150 per share because you believe the stock will rise in value over the next few days.
2. Setting the Take-Profit: You set a take-profit order at $160, meaning you want the system to automatically sell your shares once the price reaches $160.
3. What Happens: If AAPL rises to $160, the take-profit order will trigger and close your position, locking in the $10 profit per share.

Here’s how it would work:
- Entry Price: $150
- Take-Profit Price: $160
- Profit per Share: $160 - $150 = $10

For example, if you bought 100 shares:
- Total Profit: 100 x $10 = $1,000

The order executes automatically once the price hits your target. This allows you to focus on other trades without the need to manually track the market.

Why Use a Take-Profit Order?

Peace of Mind: You don’t have to sit in front of the screen waiting for your price target to be hit. Once your take-profit is in place, your trade will automatically close at the designated price.
Ensures Profit: It helps you capture gains when the price reaches your desired level, preventing the risk of losing profits if the market reverses quickly.
Automation: It removes emotional decisions, ensuring you stick to your trading plan and strategy. Traders often make mistakes when manually exiting trades out of greed or fear, which can be avoided with a take-profit order.
Risk-Reward Balance: Pairing a take-profit with a stop-loss allows you to set a clear risk-to-reward ratio for your trades. For example, if your stop-loss is set at $145 (a $5 loss per share), and your take-profit is set at $160 (a $10 gain per share), you have a 2:1 risk-to-reward ratio.

How to Set a Take-Profit Order on MatchTrader:

1. Log in: Access your MatchTrader account via desktop or mobile.
2. Select Your Trade: Choose the asset you want to trade (e.g., AAPL, EUR/USD, or any other stock/forex pair).
3. Place Your Order: Open a Buy or Sell order, depending on whether you’re entering a long or short position.
4. Set the Take-Profit Price: In the order screen, look for the take-profit section, and enter the desired price level where you want to lock in your profits.
5. Confirm: Review your order and confirm it. Your trade will execute automatically if the price reaches your take-profit level.

A take-profit order is an essential tool for traders who want to ensure they secure profits once their target price is reached. On MatchTrader, placing a take-profit order is quick and easy, and it helps you stick to your strategy without having to manage trades constantly. Whether you’re trading stocks, forex, or cryptos, setting your take-profit order lets you maintain a disciplined approach and automate the profit-taking process.