Trading & signals glossary
What is a take profit?
A take profit is an order that automatically closes a winning trade when price reaches a target you set in advance. Trading signals often come with several (TP1, TP2, TP3): each one further from entry, and each one less likely to get hit.
How it works
On a long, the target sits above your entry; on a short, below it. When price touches it, your broker closes the position, or the part assigned to that target.
With multiple targets, the usual move is to scale out: close part at TP1, part at TP2 and the rest at TP3, often moving the stop to entry after the first one.
The further away the target, the more it promises and the less often it gets hit: the real result depends on both.
How to calculate it
profit in R = |target − entry| ÷ |entry − stop|
with partial closes: sum of (fraction closed × R at that target)
Example: a gold short with three targets
- Sell gold at 4,200, stop at 4,210 (risk: $10 = 1R).
- TP1 at 4,190 (+1 R), TP2 at 4,180 (+2 R), TP3 at 4,170 (+3 R).
- Closing a third at each target, if TP1 and TP2 hit and the rest comes back to entry: (1 + 2 + 0) ÷ 3 = +1 R.
- If only TP1 hits and then the stop gets hit: (1 − 1 − 1) ÷ 3 = −0.33 R, even though the channel posts “TP1 hit.”
Our data · Verpips
What we measure in signal channels
- 38%
- reach the first target (TP1)
- 20%
- reach the second target (TP2)
- 8%
- reach the third target (TP3)
How many trades reach each target
Of the 3,866 trades we measured against real prices, 38% reached the first target; of those with a second target, 20% reached TP2, and only 8% of those with a third reached TP3. Closing everything at the first target would have improved the result in 3 channels and hurt it in 5.
Verpips data as of Oct 7, 2026, measured against the real price. See how we measure and the channel directory.
Types and variations
- Single target
- The whole position closes at one price.
- Scaled targets
- TP1, TP2, TP3… with a partial close at each one.
- Open TP
- “TP: open”: no final target; the trade runs and gets closed manually or with a trailing stop.
- Manual close
- The channel posts “close now”: a target that wasn’t in the signal.
Why it matters when choosing a signal channel
A channel can post a target hit on almost every signal (because TP1 is so close) and still lose money if the rest of the position ends up at the stop. What matters isn’t how many targets get tagged, but how much R each complete signal leaves you with.
Common traps
- Posting “TP1 hit” without mentioning that the rest of the position got stopped out.
- Setting TP3 absurdly far away so the signal looks like it promises a lot.
- Counting TP1, TP2 and TP3 on the same signal as three winning trades.
- Giving the pips on every target and never on the stops.
Key takeaways
- ✓A take profit closes the trade at a gain when the target is reached.
- ✓The further away the target, the less often it gets hit.
- ✓A “TP1 hit” doesn’t tell you how the signal ended.
- ✓Compare channels by the R of the complete signal, not by targets hit.
FAQ: take profit
What do TP1, TP2 and TP3 mean?
They’re a signal’s targets, from closest to furthest. The usual approach is to close part of the position at each one.
Is it better to use one target or several?
It depends on the channel: in our measurements, closing everything at the first target improves results for some channels and hurts them for others. That’s why we measure it channel by channel.
How far should your take profit be from your stop?
There’s no fixed rule: a close target gets hit more often and a far one pays more. What counts is the average R it leaves you with.
Channel by channel
See these numbers for each channel, not as an average.
With a free account you see each channel’s result in R, its drawdown, and what it announced versus what actually happened.