What Is The Best Take Profit Strategy?

Editorial Note: While we adhere to strict Editorial Integrity, this post may contain references to products from our partners. Here's an explanation for How We Make Money. None of the data and information on this webpage constitutes investment advice according to our Disclaimer.

Best profit taking strategies are:

Strategy 1. Fixed take profit (TP) levels
Strategy 2. Trailing stop
Strategy 3. Risk-reward ratio-based exit
Strategy 4. Using key market levels
Strategy 5. Scaling out (partial profits)
Strategy 6. Time-based exit
Strategy 7. Fundamental exit strategy

Using take-profit orders is essential for locking in gains and keeping your trading disciplined. Paired with a stop-loss order, it’s a powerful tool for risk management, helping you set predefined profit objectives and avoid emotional trading. By automating the process of closing the trade when your target is hit, take-profit strategies ensure you stick to your plan.

In this guide, we’ll explore how to choose the best take-profit strategy, use real examples to demonstrate their effectiveness and share tips to integrate these methods into your trading style. Let’s help you trade smarter and take control of your profits.

Best profit taking strategies

Effective profit-taking strategies are essential for maximizing gains and managing risk in Forex and other financial markets. Here are some of the best profit-taking strategies to consider:

Fixed take profit (TP) levels

Setting a predefined take-profit level based on technical analysis, such as key support and resistance levels.

Best for: traders who prefer clear, predetermined exit points to lock in profits without monitoring the market constantly.
Key features: simple to implement and removes emotions from trading, may miss out on larger moves if the market continues in your favor after hitting the TP level.

Trailing stop

A dynamic stop loss that moves with the market in your favor. As the price moves up, the trailing stop locks in profits by adjusting the stop loss in real-time.

Best for: traders who want to let profits run while protecting themselves from reversals.
Key features: allows for maximizing profits in strong trending markets, can be triggered prematurely in volatile markets or during minor retracements.

Risk-reward ratio-based exit

Setting take-profit targets based on a fixed risk-reward ratio, such as 2:1 or 3:1, where your potential reward is twice or three times greater than your risk.

Best for: traders who focus on consistent profitability and risk management.
Key features: creates a disciplined approach to profit-taking, ensuring risk is managed relative to reward, may not always capture the largest market moves if the price keeps trending.

Using key market levels

Taking profits at significant technical levels like Fibonacci retracement levels, moving averages, or historical support and resistance zones.

Best for: traders who are technically inclined and rely on chart patterns.
Key features: targets more strategic, meaningful profit-taking levels based on market behavior, requires detailed market analysis and experience in identifying critical levels.

Scaling out (partial profits)

Closing a portion of the position at a set profit level while leaving the rest of the position open to capture further gains.

Best for: traders who want to secure profits while maintaining exposure to a potentially more profitable trend.
Key features: allows for flexibility and reduces the risk of losing all profits in case of market reversal, can be more complicated and may require careful management of multiple positions.

Time-based exit

Setting an exit strategy based on time, such as exiting a trade after a certain period regardless of market conditions.

Best for: traders who are using day trading or swing trading strategies.
Key features: removes emotional decision-making, ensuring that the trade is closed within a specific timeframe, may lead to premature exits, missing out on larger potential moves.

Fundamental exit strategy

Taking profits based on economic news or data releases, such as after a significant earnings report or central bank announcement.

Best for: fundamental traders who track news and events closely.
Key features: aligns profit-taking with market-moving events, can be unpredictable, as market reactions to news can be volatile.

How to choose the right take profit strategy

Your take-profit strategy should align with your overall trading plan. Consider these key factors to ensure it complements your approach:

Trading style. Tailor your strategy to how you trade. Day traders often lock in smaller gains, like 1%-2%, for quick profits. Swing traders may aim for wider targets, ranging from 5%-25%, to capitalize on market swings. Scalpers focus on ultra-tight take-profits, such as 0.2%-1%, based on their fast-paced strategies.
Risk tolerance. If you’re risk-averse, opt for conservative take-profit levels to secure gains early. For those comfortable with higher risk, set more ambitious targets, allowing positions to run for potentially larger rewards.
Type of asset. Adjust your strategy based on the asset's volatility. For high-risk, volatile assets like commodities, use tighter take-profits. For stable instruments like bonds, you can aim for larger profit margins.

Examples of how to use different take profit strategies

To better understand how to apply take-profit strategies, consider a real-life example in Forex trading involving the EUR/GBP currency pair. A trader monitoring an 8-hour candlestick chart notices a potential breakout following a downtrend and enters a long position at 0.86500.

Forex trading involving the EUR/GBP currency pair

When setting a take-profit order, traders should consider factors such as trading style, risk tolerance, and the type of asset being traded. Additionally, it’s essential to evaluate characteristics specific to the currency pair. For example, EUR/GBP typically exhibits lower volatility compared to other euro or pound pairs due to the economic interdependence of the UK and the EU.

In 2024, EUR/GBP recorded a high of approximately 0.8717 and a low near 0.8259, with an average value close to 0.8488. This historical data can guide traders in determining reasonable take-profit levels based on past price behavior. By considering such market-specific factors, traders can make informed decisions that align with their trading objectives and risk management strategies.

Different types of take-profit orders for EUR/GBP

How the trader could implement take-profit strategies in this example:

Fixed take-profit. Set a predefined target, often at a 2:1 ratio to your stop-loss order. For instance, with an entry at 0.86500, a stop-loss at 0.86100, and a take-profit at 0.87300, the take-profit is 800 pips above, ensuring a balanced risk-reward ratio.
Percentage take-profit. Target a percentage of the entry price. For example, a 1% take-profit for EUR/GBP would require an 865-pip increase to 0.87365. For more volatile pairs like AUD/JPY, adjust to a higher percentage to match their range.
Support and resistance levels. Base your take-profit order on key support and resistance levels. For EUR/GBP, you might set a take-profit just below resistance at 0.87300 or above support at 0.86850 to align with trend momentum and increase profit likelihood.
Trailing take-profit by indicator. Use indicators like moving averages or Bollinger Bands to set a trailing take-profit that activates once the initial target is hit. This allows you to capture additional gains as prices move in your favour.

The importance of using take-profits in different trading strategies

Take-profit orders are essential for almost all types of traders, regardless of their trading style and strategy. Used alongside stop-loss orders, they can help you to:

Lock in profits. Closing a position at a predefined profit level helps preserve gains and avoid the risk of market reversals. For instance, automatically closing at a 10% profit ensures your returns are secure, even if conditions change.
Limit losses. By setting clear profit targets, you can manage risks and secure potential gains. This proactive approach minimizes the chance of eroding profits or facing unexpected losses.
Improve trading performance. Take-profit orders encourage systematic trading. They align your actions with predetermined objectives, helping you stick to your strategy and avoid impulsive decisions.
Prevent emotional trading. Greed and fear often lead to missed opportunities or losses. Take-profit orders remove emotions from the equation, ensuring trades close logically and are not based on hope or panic.
Save time. Managing multiple trades or a portfolio can be time-consuming. Take-profit orders automate the process, freeing you to focus on other tasks while your trades execute efficiently.

Tips on choosing the best take profit strategy

In addition to the advice offered on how to use different take-profit strategies, here are some further tips to assist you in choosing the best take-profit strategy.

Trial & error. Experiment with different take-profit strategies to see what works best for you and best aligns with your overall trading strategy. You could do this using small amounts of capital or using a demo trading account.
Flexibility. Just because you set a take-profit order, it doesn’t mean that it can’t later be changed. Maintain some flexibility in your trading strategy and be willing to adjust your take profit strategy as market conditions change. Avoid changing it based on emotions such as greed or fear, however, as this defeats the entire purpose of take-profit orders.
Be tenacious. Don’t be afraid for a take-profit order to be executed “prematurely” if the market is moving in your favour. Although at times it’s preferable to be flexible and open to adjusting your strategy, it’s also advisable to be headstrong, letting your initial take-profit close in line with your overall strategy, not giving into “fear of missing out”.

We have curated a list of brokers for 2025 that support efficient take-profit strategies, allowing you to manage risk and lock in gains effectively. These brokers offer advanced tools, customizable order settings, and market insights to align with your trading style. Choose a broker below to enhance your trading discipline and achieve your profit goals seamlessly.

Best Forex brokers
	Min. deposit, $	Max. leverage	Min Spread EUR/USD, pips	Max Spread EUR/USD, pips	Investor protection	Max. Regulation Level	Open an account
Plus500	100	1:300	0,5	0,9	€20,000 £85,000 SGD 75,000	Tier-1	Open an account Your capital is at risk.
Pepperstone		1:500	0,5	1,5	£85,000 €20,000 €100,000 (DE)	Tier-1	Open an account Your capital is at risk.
OANDA		1:200	0,1	0,5	£85,000 SGD 75,000 $500,000	Tier-1	Open an account Your capital is at risk.
FOREX.com	100	1:50	0,7	1,2	£85,000	Tier-1	Study review
Interactive Brokers		1:30	0,2	0,8	$500,000 £85,000	Tier-1	Open an account Your capital is at risk.

Adaptability is key to maximizing trading profits

In my years of experience, one thing has become clear: flexibility and adaptability often make the difference between a successful trader and one who struggles. While take-profit orders are invaluable for locking in gains and managing risk, it’s equally important to know when to adjust them.

For example, I’ve seen traders who rigidly stick to a 2:1 risk-reward ratio miss out on opportunities when market conditions shift in their favour. It’s essential to reevaluate your strategy as the market evolves, using technical indicators or updated trend data to refine your approach.

I also recommend paying close attention to the type of asset you’re trading. A take-profit strategy that works for a stable pair like EUR/GBP might not be suitable for highly volatile instruments. I once adjusted my take-profit levels mid-trade after a sudden spike in Bitcoin, capturing gains I would have missed with a static strategy. Learning to balance discipline with adaptability has been one of my most valuable lessons.

Practice is the cornerstone of improvement. If you’re new to trading, don’t be afraid to use a demo account to test various take-profit strategies in different market scenarios. It’s a low-risk way to refine your methods and build confidence before committing real capital. Remember, the goal isn’t just to win one trade — it’s to develop a system that consistently works for you.

Conclusion

Choosing the best take-profit strategy depends on your trading style, risk tolerance, and market conditions. Whether you prefer fixed targets, trailing stops, or support and resistance levels, the key is to align your strategy with your overall trading plan. A well-defined take-profit approach not only secures gains but also minimizes emotional decision-making, leading to more consistent results over time. By testing different strategies and adapting to market dynamics, traders can optimize their profits while managing risk effectively.

FAQs

What is a good take profit strategy?

Match your take-profit strategy to your trading style: smaller targets for day trading, and higher ones for swing trading. Aim for a 2:1 risk-reward ratio by setting take-profit at twice your stop-loss.

What is a good take profit percentage?

Different percentages suit various trading styles and assets. For scalping, target 0.2%–1%; for day trading, 1%–5%; and for long-term trading, 5% – 25%. Ensure your take-profit percentage is twice your stop-loss percentage.

What is the best way to take profits from stocks?

Although this will vary greatly for trading style, traders should look at take-profit orders that are 20 to 25% higher than their opening position.

What is the most profitable trading strategy?

The most profitable trading strategy depends on individual risk tolerance, market knowledge, and preferences. Day trading suits some, while others thrive with long-term investments. Success comes from strong risk management, continuous learning, and adapting to market changes.

Team that worked on the article

Alamin Morshed is a contributor at Traders Union. He specializes in writing articles for businesses that want to improve their Google search rankings to compete with their competition. With expertise in search engine optimization (SEO) and content marketing, he ensures his work is both informative and impactful.

Learn about our editorial policies

Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.

As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).

Investor

An investor is an individual, who invests money in an asset with the expectation that its value would appreciate in the future. The asset can be anything, including a bond, debenture, mutual fund, equity, gold, silver, exchange-traded funds (ETFs), and real-estate property.

Forex Risk Management

Risk management in Forex involves strategies and techniques used by traders to minimize potential losses while trading currencies, such as setting stop-loss orders and position sizing, to protect their capital from adverse market movements.

Day trader

A day trader is an individual who engages in buying and selling financial assets within the same trading day, seeking to profit from short-term price movements.

Long position

A long position in Forex, represents a positive outlook on the future value of a currency pair. When a trader assumes a long position, they are essentially placing a bet that the base currency in the pair will appreciate in value compared to the quote currency.

Take-Profit

Take-Profit order is a type of trading order that instructs a broker to close a position once the market reaches a specified profit level.