The “TP hit, but trade not closed” situation occurs when a trader’s Take Profit (TP) level is reached according to the price chart, but the trade does not automatically close as expected. This can be confusing and frustrating, especially for traders who rely on TP orders to lock in profits.
Here’s a breakdown of the most common reasons:
Bid vs. Ask Price Discrepancy
- Bid Price: The price at which the market is willing to buy from you.
- Ask Price: The price at which the market is willing to sell to you.
- Spread: The difference between the bid and ask prices.
For a SELL order, the TP is triggered when the bid price hits your TP level. For a BUY order, the TP is triggered when the ask price reaches the TP. Most charts display the bid price, so even if the chart shows the price has reached your TP, the ask price might not have hit the TP due to the spread. This is particularly common in markets with wider spreads, such as commodities or during periods of low liquidity.
Wide Spreads
In volatile markets or for certain instruments (like commodities or exotic forex pairs), spreads can be wider than usual. If the spread is wide, even if the bid price touches your TP level, the ask price may not have reached the necessary level to trigger the TP, especially in a SELL trade.
Slippage
Slippage occurs when there’s a delay in executing an order at the expected price, often due to market volatility. If the price is moving rapidly, the actual execution price might differ from your intended TP level, potentially causing the TP not to trigger.
Latency Issues
Latency refers to the delay between when you place an order and when it’s executed on the broker’s server. High latency can cause your TP order to miss being executed if the price moves quickly past the TP level before the order is processed.
Market Gaps
Market gaps can occur between trading sessions or over weekends. If the market opens significantly above or below your TP level after a gap, the order might be skipped and not executed.
Incorrect TP Setup
Sometimes, the issue lies with how the TP was set up. Misunderstanding the mechanics of your trading platform, such as how it handles bid and ask prices, can lead to setting TP levels incorrectly, resulting in the order not being closed as expected.
Broker-Specific Conditions
Some brokers might have specific conditions or delays that affect order execution. In some cases, less reputable brokers may manipulate spreads or execution prices, though this is less common with regulated brokers.
Execution Price and TP Order Type
Depending on the type of TP order and the broker’s execution policy, there might be slight variations in how TP orders are handled. For example, certain order types might not guarantee the exact TP price, leading to differences in execution.
Final Thoughts
Understanding the mechanics of bid and ask prices, spreads, and the specific nuances of your trading platform is crucial in managing your trades effectively. Always account for these factors when setting TP levels, especially in volatile or low-liquidity markets, to ensure your orders are executed as expected.