Why successful traders use Take Profit orders to earn more?

Are you already familiar with crypto trading? If yes, then you might have registered on several exchanges too. Great! Now, you can take advantage of different order types to trade effectively. For successful crypto trading, you must be aware of some basic and advanced order types like market order, stop order, stop-loss order, Take Profit order, Trailing stop, and more.

Here in this article, we will be discussing about take profit order, and its advantages. To be successful in crypto trading, one must acquire the skills of knowing when to enter or exit any trade. Sometimes, there would be a certain market condition, and you have to accept the loss or leave the trade before earning profits. Stop loss and take profit orders are certain types of orders which are supposed to save traders from losing money.

What is a take profit order?

Take profit order allows its traders to buy or sell cryptocurrencies automatically once the price of a token reaches a certain price, known as trigger price. A T/P order is a standing order which is used to sell a crypto asset once it reaches to the preset price. Selling at this level ensures that the trader will earn a profit on his trade.

This order type is useful for being able to lock-in your profits in the long position. There are multiple strategies which traders can adapt with these orders like support and resistance, daily range levels, risk reward ratio, chart patterns, etc. Apart from this, take profit orders guarantee that the full volume will be executed, with the risk of possible market price slippage.

T/P strategies are getting hugely popular among traders who place short-term trades. This order closes the open position for a profit whenever it reaches to the predetermined price/value of profit. Setting a take profit at crypto exchange platforms allows its traders to place trades automatically.

Let’s say a trader has bought any token XYZ at $100 and he sets a take profit at 10%. This means, if the price of the XYZ token reaches to $110, this order will be triggered and trade will be closed. Another benefit of using this order type is that you need not watch the market continuously; the order will be executed automatically. Most of the traders use this order in conjunction with a stop-loss order to manage their open positions. The best crypto trading platform like TrailingCrypto, Cryptohopper, eToro, etc. allows their traders to place TP orders effectively by making use of bots and trading signals.

If the asset price reaches to T/P limit, the TP order will be executed, and the position will be closed automatically. And, if the asset price falls to the preset stop-loss point, the stop-loss order will be executed and the position is closed.

Let’s understand this order type with an example:

Joe buys ETH at $10,000, and puts a take profit value +10% which means, he has created an order to sell ETH at a price of $11,000.

For some time, ETH has traded within the range of $10,000, and then continued to grow. Upon reaching $11,000 or above, your pending order with take profit +10% will be filled, and the system will close the trade with a sell order.

Here your total profit comes out as $1000.

So, a Take Profit order is a kind of pending order that is used to close a profitable position once it reaches the specified price. This was about Take Profit. But there is one more strategy which traders can choose i.e. Trailing Take Profit. In this order type, the trader has to choose the regular take profit and trailing distance. Once the TP orders reaches at the trailing distance, it will work as the new selling price of an asset.

Placing T/P order with trading bot

Apart from entering the take profit order manually, one can consider crypto trading bots to place trades automatically at the exchange platforms. Automating profit targets and stop-losses is a key feature of the automatic crypto trading platform. Making use of trading bots is an effective way to manage your positions.

Let’s understand how Take Profit order works with a trading bot:

This order type is designed for the purpose to manage risks where the system stops the bot and sells the base currency used by the trader in open orders as soon as the specified T/P conditions are met. Once the bot reaches a specified percentage or trigger price that you set in the T/P parameter, it will stop trading by selling all the base currency.

Example:

Suppose, you have an active bot trading on ETH/USDT, and you set the Take profit limit at 5%. As soon as Current Funds (In USDT) becomes +5%, the crypto trading bot will close all the orders automatically, and sell the remaining ETH.

Advantages of the T/P orders

Take Profit order is a quite useful trading feature in crypto trading that can both save you time, and also protect your investments with volatile markets.

• Whenever you are using a take profit order you do not need to monitor your portfolio all the time
• These orders are automatically executed once the trigger price is reached
• T/P order helps traders to maintain your 'risk and reward' ratio

Aim of Trailingcrypto is to Provide a Unified Trading Platform to enable user to do trading on multiple cryptocurrency exchanges from single platform. We provide many Advance Order types which is natively not available on all exchanges.