Take-profit
A take-profit is a preset order to sell your crypto or close a position at a chosen price. This lets you try to lock in profits.
What is a take-profit?
You choose in advance the price at which you want to close and how much of your position to close. For a crypto asset you’ve bought, this price is usually above your purchase price.
A take-profit can use a market order or limit order. A market order tries to sell immediately, but the final price may differ. A limit order sells only at your chosen price or higher, but it may not be filled.
With a short position, you profit from a falling price. That’s why the take-profit level is usually below the opening price.
An example of a take-profit
Someone buys one unit of a cryptocurrency for €100 and sets a take-profit at €120. If the unit sells for €120, the profit is €20 before trading fees and any taxes.
This example shows how the order can automatically trigger a sale when the chosen price is reached.
Why is a take-profit important in crypto?
Crypto prices can move quickly, and the crypto market is often open around the clock. A preset order makes it possible to take profits without constantly watching the price.
You’ll see the term in discussions about trading strategies, taking profits, and closing positions. If someone says traders are taking profits, that doesn’t automatically mean they used a take-profit order.
A take-profit doesn’t guarantee a profit. The price may not reach the set level, and during rapid price movements, a market order may be filled at a less favorable price. After the position closes, the price may also continue to rise.
