What is a Limit order (Take Profit)?
A Take Profit order is intended for realising a profit when the security price has reached a preset level. Execution of this order results in closing of the position. It is always connected to an open position or a pending order. The order can be requested only together with a market order or a pending order. For example, EUR/USD is trading at 1.3000/1.3003. You enter a market order to buy the Euro at 1.3000. To assist in risk management, you can preset a limit order (Take Profit) where your position is automatically closed at that price. If you set your limit at 1.3050, when EUR/USD price reaches 1.3050/1.3053, you are taken out of the market with a profit of 50 pips. 1.3050 [close price] -1.3000 [entry price] = 0.0050.
Related Questions
- In case of profit on a FuturePLUS position or where the Available Margin is in excess of the Margin Required, can I reduce the margin against the position to increase my limit?
- What Are Market Orders, Entry Orders, Stop Loss, Trailing Stops And Profit Limit Orders?
- Can I place profit limit and stop loss orders?
