Take Profit (TP) is a predetermined order to close profitable positions when prices reach specified target levels. TP orders help lock in gains and prevent giving back profits during market reversals. These orders provide discipline and automation for profit-taking decisions, removing emotional bias from exit timing.

Take profit levels are typically set based on technical analysis, risk-reward ratios, or percentage gains. Multiple TP levels can be used to scale out of positions gradually. Understanding TP strategies helps optimize profit realization while balancing the desire to capture gains against the potential for continued favorable price movement.

Real-world example: A trader buys Tesla at $250 with a take profit order at $275, automatically closing the position for a $25 per share gain when the stock reaches the target, securing profits without monitoring the market continuously.