How does take profit and trailing take profit work?

Take Profit(TP) and Trailing Take Profit (TTP) are intended to maximize the profit you would have in trading by 'trailing' or 'following' the price of an asset and determining when to sell based on whether the price has gone up or down.

You can quickly set up TP and TTP on Mudrex. Read more about stop-loss, TP and TTP.




How does it work:

1. Let us assume that you bought ETH at 100$ and set a TP of 10%.

2. This means that when the price reaches 110$ your Take Profit will get triggered and trade will be closed. 

3. However, similar to Trailing Stop Loss, Trailing Take Profit will not be a constant $110 but will continue to change based on how the price has moved.

4. For TTP we need to define another parameter called the 'Trail Limit' i.e. how much is the price allowed to fall from the peak before selling it. Let's set the trail limit at 2% and try to understand what happens to the TTP value.

5. As a result, TTP helps you maximize profit and exit at the right time instead of exiting preemptively.


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