What is a 'Take-Profit Order - T/P'
A take-profit order (T/P) is an order used by currency traders specifying the exact rate or number of pips from the current price point where to close out their current position for a profit. The rate deemed to be the level where the trader wants to take a profit is sometimes referred to as the "take-profit point".
BREAKING DOWN 'Take-Profit Order - T/P'
As the name suggests, take-profit orders are used to lock in profits in the event the rate moves in a favorable direction. For example, if you are long a currency pair position and believe the price will rise to a certain level, but are unsure what it will do beyond that level, placing a take-profit order at that point will automatically close out your position allowing you to lock in profit. Example: Buy $100 worth of yen at 107.4 yen per dollar = 100*107.40 = 10,740 yen
Place a take-profit order at 108.80. Price then rises from 107.40 to 108.80 Take-profit order automatically executed to sell $100 and buy 10,880 yen
Profit of 140 yen realized.