What is Take-Profit?

A take-profit is the counterpart to a stop-loss. Where a stop-loss caps a loss, a take-profit locks in a gain by closing a position once it reaches a target price.

How a take-profit works

You set a price above your entry (for a long position) at which the position should close automatically. When the market reaches it, the position is exited and the gain is realized. Take-profits remove the temptation to hold a winner too long, at the cost of capping the upside if the move continues past the target. Traders often set a take-profit and a stop-loss together to define both the reward and the risk of a trade in advance.

Why it matters in copy trading

When you copy a trader, you follow their exits as well as their entries, so if the leader uses a take-profit, your copied position closes when theirs does, sized to your account. You do not have to watch for the target yourself. The relationship between a leader’s typical take-profit and stop-loss distances is also what shapes their risk/reward ratio, which is worth looking at when you choose who to follow.