A Take-Profit Order (TP) is a type of order that a trader uses to automatically close a trade when a certain level of profit has been reached. The order is placed at a specific price level, and when the market price reaches that level, the trade is closed, and the profit is locked in. Take-Profit orders allow traders to set a specific target for their trades and take profits without having to constantly monitor the market.Take-Profit orders are typically used in conjunction with a Stop-Loss order, which is used to automatically close a trade when a certain level of loss has been reached. Together, these two types of orders can help to manage risk and ensure that traders are able to lock in profits while also limiting losses.Example:A trader buys 100 shares of XYZ stock at $50. He sets a Take-Profit order at $55 and a Stop-Loss order at $47.50. If the stock price rises to $55, the Take-Profit order will be executed, and the trader will sell the shares at $55, locking in a profit of $5 per share. If the stock price falls to $47.50, the Stop-Loss order will be executed, and the trader will sell the shares at $47.50, limiting their loss to $2.50 per share.
