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Portfolio Rebalancing

In short

Adjusting holdings back to target allocation — keeps risk profile consistent

If your target is 60% stocks / 40% bonds but stocks rally and become 75%, rebalancing sells some stocks and buys bonds to restore the 60/40 split. It's automatic discipline — sell high, buy low.

Portfolio rebalancing restores target allocations that drift due to different asset returns. The platform's rebalancing engine calculates required trades to minimize drift while considering transaction costs and tax implications. Threshold-based rebalancing triggers when any allocation drifts beyond a set percentage.

Formula

Trade Size = Current Value - (Target Weight × Total Portfolio Value)

Related concepts

  • Asset Allocation — Asset allocation is how you divide your money between different types of investments. A classic '60/40' portfolio is 60% stocks, 40% bonds. It's the most important decision in investing — determines most of your long-term returns and risk.
  • Strategy Alignment — When you pick an investment strategy (like value investing or momentum), the platform scores each stock on how well it fits that strategy. High alignment score = great match. Low score = doesn't fit your style.
  • Broker Integration — Broker integration lets you connect your real brokerage account (like Trading212) to the platform via SnapTrade. Once connected, you can see your live positions and execute trades directly from Strategy Investor.
  • Tax-Loss Harvesting — If you're up $10,000 on Apple but down $3,000 on another stock, you can sell the loser to offset $3,000 of your Apple gains. You only pay tax on $7,000 instead of $10,000. The IRS lets you use losses to cancel gains.