Take profit
A take profit is an order attached to a position that closes it automatically once price reaches a preset target, converting an open gain into realized profit.
It executes as a limit order, so it fills at the target or better and does not suffer adverse slippage in normal conditions. Set against the stop loss, it fixes the trade's risk-reward ratio before entry: long EURUSD at 1.0900 with a stop at 1.0880 and a target at 1.0940 risks 20 pips to make 40 — $200 against $400 on one lot, a 1:2 trade.
Its quieter benefit is behavioral. Deciding the exit in advance removes the in-trade negotiation in which winners get cut early or held until they turn into losers, and it books floating P&L into a realized result without you watching the screen.
In a prop-firm challenge
A typical two-step evaluation asks for around 8% in phase one and 5% in phase two. Pre-planned targets accumulate toward that steadily, and they help avoid the outsized single days that can conflict with a consistency rule at firms that use one — some rulebooks cap how much of the total profit any one day may contribute. Planning exits in advance also keeps results even enough to audit, a point expanded in consistency rules explained.