A take-profit target is the profit percentage at which a position closes automatically. Too high and it rarely fires. Too low and it leaves profit on the table.
What take-profit does
When a DCA buy executes, a matching sell order is placed at a predefined price. If the market reaches that price, the position closes automatically and the profit becomes realized.
This is the mechanism that turns I am up on paper into I am up in my account.
Without a take-profit, everything stays open until you decide manually. With one, the decision is made once and runs on its own.
Pick something realistic
A good starting point: a take-profit the market actually hits often enough inside a typical price cycle.
More concretely:
- Very low target: for example 1%. Fires constantly, but fees eat a large share of the profit.
- Moderate target: for example 3% to 8%. A balance between frequency and return per sell.
- High target: for example 30% and above. Fires rarely, positions stay locked for months.
Look at what similar price moves did over the last 6 to 12 months. If your target was never touched during that window, it is probably too high.
How it affects your plan
Take-profit controls how fast capital cycles. A low target means a fast cycle and few open positions. A high target means a slow cycle and a lot of deployed capital sitting at once.
That is why you never choose take-profit on its own. Always read it next to cadence and size. Otherwise a target that sounds reasonable becomes a peak exposure your wallet cannot survive.
