Take Profit Guide Strategic Exit Rules for Profit Taking
Taking profits is an art and science. Learn when to exit profitable trades, how to let winners run, and systematic approaches to profit-taking that remove emotion from your decisions.
30-Second Summary
- •Set profit targets at logical resistance/support levels
- •Use risk-reward ratios (minimum 1.5:1) as profit guides
- •Consider partial profits to balance greed and fear
Should You Take Profit and Where to Set Targets
Should You Take Profit?
Yes, but systematically. Many traders either take profits too early (fear) or too late (greed). The key is having a plan before entering the trade.
- • Take profits when targets are hit Don't second-guess your plan
- • Use trailing stops for trending markets Let winners run with protection
- • Scale out in uncertain conditions Reduce risk while maintaining exposure
Where to Set Take Profits
Place targets where price is likely to meet resistance or where your risk-reward becomes attractive. Never set random pip targets.
- • Technical levels Previous highs/lows, trend lines
- • Risk-reward ratios 1.5R, 2R, 3R based on your stop loss
- • Round numbers 1.2000, 150.00 (with caution)
The Profit Taking Paradox
Taking profits feels good, but taking them too early limits your account growth. The goal is to balance securing gains with letting profitable trades reach their full potential. Your stop loss placement protects you, so focus on where profits should logically end.
5 Professional Take Profit Methods
1. Structure-Based Targets
Set targets at key resistance (for longs) or support (for shorts) where price historically struggles.
Works best in ranging markets or when approaching major levels.
Example
- Setup Long EUR/USD at 1.0850
- Next Resistance 1.0920 (previous swing high)
- Take Profit 1.0915 (5 pips before resistance)
- Logic Avoid rejection at obvious level
2. Risk-Multiple (R) Targets
Set targets based on multiples of your risk. If risking 50 pips, target 75 pips (1.5R) or 100 pips (2R).
Excellent for maintaining positive expectancy regardless of win rate.
Example
- Setup Long GBP/USD at 1.2650
- Stop Loss 1.2600 (50 pip risk)
- Take Profit 1.2750 (100 pips = 2R)
- Logic 2:1 reward-to-risk ratio
3. Partial Profit Taking (Scale Out)
Take 50% profits at first target, let remainder run with trailing stop or second target.
Reduces psychological pressure while maintaining upside potential.
Example
- Setup Long USD/JPY at 150.00
- Risk 50 pips to 149.50
- First Target 150.75 (1.5R) - Close 50%
- Second Target 151.50 (3R) - Close remaining 50%
4. Trailing Stop Concept
Move your stop loss to lock in profits as trade moves in your favor. Simple approach for trending markets.
Best for strong trends where you want to capture maximum movement.
Example
- Setup Long EUR/USD at 1.0850, stop at 1.0800
- Price at 1.0900 Move stop to 1.0850 (break-even)
- Price at 1.0950 Move stop to 1.0900 (lock 50 pips)
- Logic Capture trend while protecting gains
5. Time-Based Exits
Close profitable positions before market close, weekends, or major news if targets aren't hit.
Risk management tool for avoiding overnight or event gaps.
Example
- Setup Intraday trade with 30 pip profit
- Time Rule Close 30 minutes before NFP release
- Logic Avoid volatility risk, secure existing gains
The 3-Step Take Profit Process
Define Target Logic
Where do you expect resistance? What's your minimum acceptable reward? Choose your method.
Check Risk-Reward vs Stop
Calculate the ratio. If less than 1.5:1, consider skipping the trade or adjusting targets.
Write the Rule as a Sentence
Example: "Take 50% profits at 1.5R, trail stop to break-even, exit remainder at next resistance." Use the position size calculator to ensure proper risk management.
Common Take Profit Mistakes to Avoid
Taking Profits Too Early
Fear drives premature exits. Stick to your plan and let trades reach logical targets.
Moving Targets Further Away
Greed makes you extend targets when close. Moving targets away usually leads to missed profits.
Setting Targets at Exact Resistance
Price often reverses just before hitting obvious levels. Place targets 5-10 pips before key resistance.
No Risk-Reward Planning
Random profit targets without considering your stop loss distance leads to poor long-term results.
Real Examples: Trend vs Range Profit Taking
Strong Trend Example
Scenario: USD/JPY Strong Uptrend
- Market Context Clear uptrend, momentum strong
- Entry Long at 150.00
- Stop Loss 149.50 (50 pip risk)
- First Target 150.75 (1.5R) - Close 50% of position
- Management Trail stop to 150.00, let remainder run
- Final Exit Trailed out at 151.20 for additional 70 pips
Key Point: In strong trends, use partial profits and trailing to capture maximum movement.
Range Market Example
Scenario: EUR/USD Trading Range
- Market Context Range between 1.0800-1.0900
- Entry Long at 1.0820 near range bottom
- Stop Loss 1.0790 (30 pip risk, below range)
- Target Logic Range top minus buffer
- Take Profit 1.0885 (65 pips, 2.2R ratio)
- Result Full position closed at target
Key Point: In ranges, take full profits near opposite boundary rather than trailing.
Complete Your Exit Strategy Mastery
Related Guides
Take Profit Checklist
- ✓ Profit target set before entering trade
- ✓ Risk-reward ratio calculated (minimum 1.5:1)
- ✓ Target placed at logical technical level
- ✓ Partial profit strategy decided if applicable
- ✓ Rule written as repeatable sentence