In simple terms
Taking profit means closing all or part of a position that is worth more than its cost. Before closing, the gain is unrealized and changes with price; after execution, it is realized, subject to applicable costs and taxes.
Full, partial, and order
A full exit removes the position. A partial exit reduces exposure while leaving some quantity open. The trader may use a take-profit order, a limit order, or another instruction offered by the venue.
The decision should follow written criteria such as a target, invalidation, risk-reward rule, or new information. Repeatedly moving the objective because price rises is not a defined exit plan.
Limit
Taking profit does not necessarily mean closing everything or obtaining the best possible price. An order may fill only partly or not at all; the market may also continue rising after an exit or reverse before the target.
Sources
- CME Group, Trading Strategies in Your Trade Plan — includes stops, profit targets, and exit management in a trade plan.
- FINRA, Order Types — explains execution differences and risks for market, limit, and stop orders.
- CME Group, Position and Risk Management — connects an exit decision with profit or loss targets being reached.