Profit Target Calculator
Calculate exactly where to place your take profit limit order based on your entry, stop loss, and desired risk/reward ratio.
Trade Planning
Example: Entering 2.5 means you want to make 2.5x what you risk.
Required Profit Target
Points / Price
Points / Price
Stop Guessing Your Exits
One of the biggest mistakes novice traders make is setting their profit targets based on "feeling" or arbitrary dollar amounts. A professional trader sets their Take Profit (TP) order mathematically based on their structural Stop Loss and their required Risk/Reward ratio.
How the Profit Target is Calculated
To find exactly where to place your limit exit order, the calculator measures the exact price distance between your entry and your "uncle point" (Stop Loss). It then multiplies that distance by your desired ratio and adds it to your entry price (for longs) or subtracts it (for shorts).
- Entry Price: $4000
- Stop Loss: $3980
- Risk Distance: 20 Points
- Desired Ratio: 1:3
- Math: 20 pts x 3 = 60 pts Reward
- Take Profit Placement: $4060
Why Strict Targets Matter
Your trading strategy should have a known statistical win rate. If your strategy wins 40% of the time, you mathematically must have an average Risk/Reward ratio greater than 1:1.5 to be profitable.
If you manually close a trade early because you got scared, you might capture a 1:1 ratio. Over a large sample size of trades (e.g., 100 trades), closing early destroys the positive expectancy of your system, turning a profitable strategy into a losing one.
Frequently Asked Questions (FAQ)
Should I use limit orders or market orders for Take Profit?
Always use Limit Orders for Take Profits. A limit order guarantees you will be filled at that exact price or better, eliminating slippage. Market orders should generally only be used for emergency stops.
How do I manage trailing drawdowns and stops?
As a trade moves in your favor, many traders move their stop loss to their entry price (breakeven) to ensure a risk-free trade. However, you should still leave your Take Profit limit order exactly where the math dictated it should be upon entry.
The tools and calculators provided on The Simple Toolbox are intended for educational and informational purposes only. They do not constitute financial, legal, tax, or professional advice. While we strive to keep calculations accurate, numbers are based on user inputs and standard assumptions that may not apply to your specific situation. Always consult with a certified professional (such as a CPA, financial advisor, or attorney) before making significant financial or business decisions.
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