Take profit: what it is and how to choose the target

What a take profit is

The take profit (literally “take the profit”) is an order that tells the exchange: “if the price reaches this level, close the position”. In a long the target sits above the entry, in a short below it. It is the sibling of the stop loss: the stop decides how much you are willing to lose, the take profit decides where you are happy to exit with a gain.

In everyday language it is also called target. They are the same thing.

Why you need to decide the target before entering

When a trade goes well, the temptation is to say “I'll wait a little longer”. Sometimes it works, more often the price comes back and the gain that was in your account vanishes. The opposite happens when it goes badly: you exit too early, scared, and then the price takes off again.

Deciding the target with a cool head, before entering, takes emotion out of the choice. It does not change the outcome, but it gives you a rule to compare with what happens, and it lets you judge the trade before you take it.

How to choose the target

There is no single formula. Three criteria are usually used, best together:

• The chart structure: the price tends to slow down or reverse where it has already met obstacles in the past, the so-called resistances (for a long) or supports (for a short). Placing the target just below a resistance avoids hoping for a move that the chart has never allowed.
• Volatility: if a coin moves on average 3% a day, a target at +30% in one day is an illusion; one at +3% is plausible. The target has to be measured against how much that market really moves.
• The ratio to the stop: it is the most important criterion, and we look at it below.

The ratio between target and stop

The distance between entry and stop is what you risk; the distance between entry and target is what you can gain. Their ratio is called R:R (risk/reward), and it is measured in R: a loss down to the stop is worth −1R, an exit at the target that gains twice what you risked is worth +2R.

With an R:R of 1 to 2, the trade breaks even if you win one time in three, before costs: two losses of −1R and one gain of +2R add up to zero. With a target of only €105 (R:R 1 to 1) you would need to win half of the time just to avoid losing. The numbers are an example to understand the mechanism, not the result of a real system.

Watch out for the opposite: pushing the target further away just to make the ratio look good is a mistake. If the chart leaves no room up to €110, a nice R:R on paper is worth nothing.

Exiting all at once or in parts

Many traders split the position into several targets, for example half at the first level and half at the second. There are two advantages: you collect a part when the price gets there, and you leave the other part free to run if the move continues. The downside is that, if the move keeps going without pausing, the total gain is lower than what you would have had by exiting everything higher up.

It is often paired with moving the stop: after the first target the stop rises to the entry price, so the rest of the trade can no longer turn into a loss (barring price gaps). That is how a trailing stop works.

What can go wrong

• The price stops just short: it reaches €109.80, turns back and the target is not triggered. It happens often, and it is why many place the target a little before the “perfect” level.
• The target is hit and the price keeps going: it is the feeling of having left money on the table. It is the price of having a rule, and it is not a mistake.
• Costs: commissions, and on perpetuals the funding, reduce the net gain. A target that is too close can be eaten up by them.
• Limit orders are not always filled: if the price touches the level for a moment with few trades, your order may stay unfilled.

The most common mistakes

1. No target: you enter “to see where it goes” and exit by gut feeling.
2. Moving it further away every time the price gets close.
3. A target chosen at random, at a round number, without looking at the chart.
4. Ignoring the stop: talking only about how much you can gain, not how much you can lose.

How STA handles it

In STA every card is born with entry, stop and target already defined, and with an exit plan that explains how to exit as the position moves. A team of 10 agents proposes them: the Exit Planner handles this part, after Bull and Bear have debated the idea. You can see it in the free DEMO, which works with virtual money. In the launch phase (from 16/10/2026) STA's fees are temporarily disabled, even in REAL; the standard price list is 18% of the positive net result of each day, with no offsetting of losses.

In short

A good target is decided beforehand, rests on a level of the chart, is measured against volatility and compared with the stop. No target is right in absolute terms: it is a rule that makes the trade assessable, and keeps emotion out of the moment when it matters most.

Frequently asked questions

This article is for information only and is not investment advice. Trading crypto-assets involves a high risk, including the total loss of the capital used. Numerical examples are for illustration.