An order placed with a broker to buy or sell a security when it reaches a certain price, used to lock in an investor's profit on a position. Take-profit orders help traders secure gains by automatically closing positions when a target price is reached. They are useful for ensuring that profits are realized without the need for constant market monitoring.
Example: A trader buys a currency pair at 1.1000 and places a take-profit order at 1.1050 to automatically sell the position when the price reaches that level, locking in profits.
