Take profit - definition

A take profit order is a pending instruction to close an open position automatically when the market reaches a specified price level in the trader's favour. It locks in realised gains by exiting the trade at a predetermined target, removing the need for manual monitoring. In forex trading, take profit orders apply to any currency pair and can be set at order entry or added to an existing position, but they are not available during market gaps or extreme volatility when the broker may fill the order at the next available price.

TP distance (in pips) × pip value (in AUD) × lot size = target profit (in AUD)

A trader buys 1 standard lot of EUR/AUD at 1.6500 and sets a take profit at 1.6600. The TP distance is 100 pips. For a standard lot on EUR/AUD, the pip value is approximately 10 AUD. The calculation is: 100 × 10 × 1 = 1,000 AUD target profit. If the price reaches 1.6600, the position closes automatically and the trader receives 1,000 AUD in realised gains.

• JPY pairs: For pairs where the quote currency is JPY (e.g., AUD/JPY), the pip value is calculated differently because one pip equals 0.01 instead of 0.0001. Always verify pip value before setting a TP.
• ASIC rules: Australian brokers regulated by ASIC may impose minimum TP distances or restrict TP orders on certain products during news events to prevent slippage.
• Fractional lots: Using micro (0.01) or mini (0.10) lots scales the profit linearly. A 0.10 lot with the same 100-pip TP yields 100 AUD, not 1,000 AUD.

• Stop-loss
• Risk-reward
• Lot
• Pip