Target (T1, T2, T3)

A target is the price at which you plan to take profit, fixed before you enter. With a single target the trade is all or nothing. With staged targets, written T1, T2 and T3, you split the exit: part of the position is booked at the nearest level, part at the next, and the last part is left to run to the furthest one.

Staging exists because nobody knows how far a move will go. T1 is the nearest level and the one most likely to be reached. T2 and T3 are reached less often but pay more when they are. Booking in parts means a modest move still gives you something, and a large move is not sold entirely at the first level.

For Indian derivatives traders there is a practical catch. To book in parts you need more than one lot in futures or options, because a single lot cannot be split. With one lot you must choose one target to exit at, and you should choose it before the trade, not while watching the ticks.

The common mistake is treating targets as predictions. They are planned exit points, and price is under no obligation to reach them. The second mistake is cancelling the T1 exit when the trade looks strong, hoping for T3, and then watching price come back to the stop-loss. The third is a target so close that the reward does not justify the risk.