The Profit Target is the profit amount you need to reach in a particular phase of the challenge. It's calculated based on the profit earned from closed positions only, excluding any open positions.
To move to Phase 2 (or 3) and eventually to the funded phase, you must close all your positions.
Profit exceeding the profit target cannot be moved to the next challenge phase. If you achieve a 12% profit in Phase 1, you've hit the Profit Target, but you'll start from the beginning in the next phase.