Profit Target

AAA

DEFINITION of 'Profit Target'

A predetermined point at which an investor will exit a trade in a profitable position. Profit targets are part of many trading strategies that technical traders use to manage risk. Before an investor enters a trade, he determines a profitable exit point at which he will sell out of the position. Traders establish profit targets to avoid letting emotion take over a trade. A profit target can be expressed as a dollar amount or as a percentage return.

INVESTOPEDIA EXPLAINS 'Profit Target'

The opposite of a profit target is a stop loss point – a price point at which an investor exits a trade that has experienced a predetermined level of loss in order to avoid losing even more. Some investors use chart patterns to determine their entries, stops and profit targets. They look for patterns, such as triangles and head and shoulders, that make it easy to identify these three points.

RELATED TERMS
  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches ...
  2. Above The Market

    An order to buy or sell at a price set higher than the current ...
  3. Stop Hunting

    A strategy that attempts to force some market participants out ...
  4. Exit Strategy

    1. The method by which a venture capitalist or business owner ...
  5. Protective Stop

    A strategy designed to protect existing gains or thwart further ...
  6. Back-To-Back Deductible

    An insurance policy deductible that is the same as the coverage ...
Related Articles
  1. Trading Strategies

    Patience Is A Trader's Virtue

    Waiting may be the biggest key to reeling in that trophy investment.
  2. Economics

    Target Prices: The Key To Sound Investing

    Learn how to evaluate the legitimacy of target prices and why investors should trust these over ratings.
  3. Investing Basics

    Revenue Projections Show Profit Potential

    Examining how a company makes money can offer clues about its earnings potential.
  4. Active Trading Fundamentals

    Trade On Support For The Best Exit Strategy

    Find your sound exit strategy based on support and resistance levels, while understanding the psychology behind them.
  5. Active Trading Fundamentals

    A Look At Exit Strategies

    Setting appropriate exit points should help you avoid taking premature profits or running losses.
  6. Options & Futures

    Maximize Profits With Volatility Stops

    Find out which type of volatility stop fits your trading objectives.
  7. Mutual Funds & ETFs

    Five Janus Mutual Funds With High Alpha

    A look at some of the alpha-generating equity funds from Janus.
  8. Fundamental Analysis

    Understanding the Capital Adequacy Ratio

    The capital adequacy ratio (CAR) is an international standard that measures a bank’s risk of insolvency from excessive losses. Currently, the minimum acceptable ratio is 8%. Maintaining an acceptable ...
  9. Investing

    What does Large Cap mean?

    The “cap” in large cap refers to a company’s capitalization as determined by the total market value of its publicly traded shares. Large cap is short for “large market capitalization.”
  10. Stock Analysis

    What Would Be Of BreitBurn Energy This Summer?

    This Spring, BreitBurn Energy Partners' banks will take a closer look at its credit facility and redetermine its borrowing base.

You May Also Like

Hot Definitions
  1. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  2. Fixed-Charge Coverage Ratio

    A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated ...
  3. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  4. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  5. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  6. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
Trading Center