What Is the Difference Between Target Price and Trigger Price in Trading?

Learn the key differences between target price and trigger price to better manage your investment strategies and trading orders.

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Target price is the price an investor aims to buy or sell a security for, usually based on their analysis and investment strategy. Trigger price, on the other hand, is a set price that activates a trading order, such as a stop-loss or a buy order. When the market price hits the trigger price, it turns the intended action into a market order. In short, target price is an investor’s goal, whereas trigger price is a specified condition to execute a trade.

FAQs & Answers

  1. What is a target price in investing? A target price is the price level an investor aims to buy or sell a security based on analysis and investment goals.
  2. How does a trigger price work in trading? A trigger price is a predetermined price that, when reached, activates a trading order like a stop-loss or buy order, converting it into a market order.
  3. Can target price and trigger price be the same? While they can be set at similar levels, target price is an investment goal, whereas trigger price is specifically used to execute a trade once conditions are met.
  4. Why is it important to understand the difference between target price and trigger price? Understanding the difference helps investors better plan their trades and manage risks effectively by distinguishing between desired price goals and actual execution points.

Watch More

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