Enter the entry price and stop loss level into the calculator to determine the take profit level. This calculator can also evaluate any of the variables given the others are known.
Take Profit Formula
The following formula is used to calculate the take profit level in trading.
TP = EP + (EP - SL)
Variables:
- TP is the take profit level
- EP is the entry price
- SL is the stop loss level
To calculate the take profit level, subtract the stop loss level from the entry price, then add the result to the entry price. This will give you the price level at which you should take your profit to maximize your potential return while minimizing your risk.
What is a Take Profit?
A Take Profit is a type of order in trading that allows a trader to lock in a specified level of profit by automatically closing the trade once the market price reaches the set level. It is a tool used in risk management to ensure that potential profits are not lost if the market moves in an unfavorable direction. This order remains effective until the position is liquidated or the trader cancels the take profit order.
How to Calculate Take Profit?
The following steps outline how to calculate the Take Profit (TP) using the formula TP = EP + (EP – SL).
- First, determine the entry price (EP).
- Next, determine the stop loss level (SL).
- Next, use the formula TP = EP + (EP – SL) to calculate the take profit level (TP).
- Finally, calculate the Take Profit (TP).
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem:
Use the following variables as an example problem to test your knowledge.
Entry price (EP) = $50
Stop loss level (SL) = $45
