What is take-profit order?

A resting order that closes a position once price reaches a target in your favor.

It is the upside counterpart to a stop, and exchanges usually offer both a take-profit market version, which fills at whatever is available when triggered, and a take-profit limit version, which will not fill worse than a price you set. Many venues let you attach both a take-profit and a stop to a single position, so whichever triggers first cancels the other. Confirm which flavor you selected, because the market version can slip in a fast tape. See stop order and limit order.

The structural point is that it is the same machinery as a stop, pointed the other way. Everything true about triggers and fills for one is true for the other.

How it works

You set a trigger above the market for a long position, or below it for a short. Nothing rests on the order book until the trigger is touched, so the instruction is invisible to everyone else.

On trigger, one of two things happens depending on what you chose. A take-profit market becomes a market order and fills against whatever is there. A take-profit limit becomes a limit order at your stated price and fills only at it or better.

The asymmetry with a stop is worth naming. A stop fires into a market moving against you, which is when depth thins and fills get worse. A take-profit fires into a market moving in your favor, which is generally better supplied, so the slippage risk is usually smaller. Usually is not always: a spike that reverses immediately can trigger a take-profit market and fill it on the way back down.

Paired orders are common. Attaching a take-profit and a stop to the same position, where the fill of one cancels the other, is offered under names that vary by venue, and the cancellation is handled by the exchange rather than by you. Check the venue's own order-type documentation for whether partial fills cancel the sibling proportionally or entirely.

Example

Illustrative figures. You buy 1 unit at $100 and attach a take-profit at $120 and a stop at $90, paired so one cancels the other. The market rises and touches $120. A take-profit market fills at roughly $120, giving a $20 gain before fees. A take-profit limit set at $120 rests there and fills only if enough size trades at $120 or better, so a market that touches $120 for a second and falls back may leave you unfilled and still holding. The stop at $90 is cancelled the moment the take-profit fills, which is the point of pairing them.

Why it matters when you buy

These are exit tools, so they matter to the same decision as order type generally: how much of the quoted price you keep. Venue support and naming differ, and the exchange pages list what each one offers. The guide on limit and market orders covers the underlying choice, and the liquidity pages show how thin each market is.

Related terms

• stop order — the same mechanism on the downside
• stop limit order — the two-price version
• limit order — what the limit variant places
• market order — what the market variant places
• time in force — how long the resulting order lives
• trailing stop — a target that follows the market

Questions

Is a take-profit order the same as a limit order?

Not quite. A limit order rests on the book immediately and is visible. A take-profit stays with the exchange until its trigger is touched, then places an order.

What happens to my stop when the take-profit fills?

On a paired order the exchange cancels the sibling automatically. If you placed them separately, both remain live and you can end up with an unintended position on the other side.

Do these work on spot markets?

Support varies by venue. They are universal on derivatives platforms and common but not guaranteed on spot, so check the order-type list on the exchange you are using. See spot market.