Take Profit orders are similar to stop loss orders, only referring to profits. Take
Profit orders make sure that once your trade reaches a certain level of profit it
will be closed. By setting a take profit order, you protect your profit in the case
that your trade becomes unprofitable.
For instance, imagine that you've bought EUR/USD at the rate of 1.5400. After a
few hours the rate rises to 1.5500, but an hour later drops to 1.5300. Without a
Take Profit order, you might miss the rise in the rate, and end up with a loss on
your hands.
If you had set a Take Profit order, the potential profit of the trade would have
been realized, without you having to monitor the trade around the clock.
Remember, Stop Loss and Take Profit orders are very simple tools that can make the
difference between a successful trading career and a big hole in your pocket. Consider
using these orders with every trade that you make.
Now that I know how to hedge my risks and rewards, when should I dive in?
In the Forex market, some times are better than others for trading. Read further
on The Quest for Volatility.