A take profit (TP) also known as target profit order is a directive to end a transaction at a particular price if the market is moving in your favour, ensuring that the profit is realised and added to your available balance. 

When the market hits your desired rate and you have earned the predetermined profit, the Take Profit will activate and immediately close your trade. A profit target can help a trader in maintaining their objectives, regardless of what they may be.

Profit objectives are used by both short-term technical traders and long-term investors as a component of their risk management plans. Traders use profit targets as a technique to lower risk because the market doesn't move in one way forever and a lucrative transaction might become a loss if profit is not taken at the proper time. 

Profit targets are set at a price where the trader wants to take a profit. The key features of Target/Take profit are-

·       Limit orders that are closed when a predetermined profit threshold is reached are known as take-profit (T/P) orders.

·       T/P orders' limit prices are set using either fundamental analysis or technical analysis.

·       Take-profit orders are advantageous for short-term traders looking to profit from a sharp increase in the price of securities.

Take Profit orders can be considered a crucial component of trade management, which is extremely important in managing risks. It will be practically impossible for a trader to be profitable without taking profits at the appropriate time because it acts as a guide to his reward/risk permutation.