Trailing stop vs profit lock: what is the difference?
Both tools follow the price upward and sell when it turns. The difference is where they start, and that decides whether they can ever book a loss.
How a trailing stop works
A trailing stop sits a fixed distance below the price from the moment you buy. As the price rises, the stop rises with it. If the price falls by that distance, it sells.
The weakness: if the price drops right after you buy, the stop triggers below your entry and you take a loss.
How a profit lock works
A profit lock does nothing until the trade is comfortably in profit. Then it places a floor above your entry price, including fees, and trails upward from there. It only ever moves up.
Because the floor starts above your cost, a sale triggered by the lock is always a winning one.
The same trade, two outcomes
| What the price does | Trailing stop | Profit lock |
|---|---|---|
| Rises steadily, then turns | Sells near the top, profit | Sells near the top, profit |
| Rises a little, then falls back | Small profit or small loss | Small profit |
| Falls straight after the buy | Sells at a loss | Does nothing, position waits |
The last row is the whole difference. A trailing stop limits the loss and frees your money. A profit lock refuses the loss and leaves your money in the position until the price comes back.
Which is better?
Neither is free. A stop gives you certainty about the size of a loss. A lock gives you certainty that closed trades are winners, at the price of money that can sit underwater. On assets that may never recover, a stop is the safer tool. On major assets, waiting has usually been rewarded, though nothing guarantees it.
Treo uses the profit lock on major assets. Read the full rule and its trade off.
Questions
Can I set a stop loss in Treo?
You can close any position yourself at any time, and you can change your risk settings. By default Treo does not sell at a loss on its own.
How far below the price does the lock trail?
A small distance, so that small wins get banked instead of slipping away. You can adjust it in Settings or leave the managed default.
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