What is a take profit order and how to use it?
Take profit orders allow traders to set a predefined price target for an open position. It is often used by short-term traders to manage risk and lock in profits. Upon reaching a profit target, a take profit order automatically closes your position.
For a long position, the trigger is set above the current price. For a short position, the trigger is set below the current price. If the asset reaches the trigger price, the status on the order changes from untriggered to open.
A take profit order is the flip-side of a stop loss. While a stop loss controls downside risk, take profit orders lock in upside gain. It is a common strategy to have both a stop loss and a take profit order set against the same open position. dYdX supports both market and limit take profit orders.
Take Profit Order
A conditional order type that specifies the price at which to close out an open position for a profit.