Take Profit Targets
Take profit orders are similar to stop loss orders, but they preserve your profits instead of reducing your losses. These orders are designed to automatically sell positions when the price reaches a certain profit level. Take profit orders can help you secure gains without having to wait for the "ideal" exit.
How to Set Take Profit Targets
Risk-to-Reward Ratio: You can use a risk-to-reward ratio, such as 1:2, which means you aim to earn two dollars for every dollar at risk. If the stop loss level is $1,000 below the entry price, you can set a take profit target $2,000 higher.
Fibonacci Levels: One alternative is to use Fibonacci retracement and extension tools to determine potential profit levels. For example, a Fibonacci extension level of 1.618 typically represents a major take profit area.
Advantages
Preventing over-trading due to greed
Helping to achieve consistent profits by focusing on pre-defined targets
