Rebalancing
The process of readjusting portfolio weights back to target allocations by selling overweight positions and buying underweight ones.
Explained Simply
Over time, winning positions grow and losing positions shrink, causing your portfolio to drift from its target allocation. A portfolio that starts at 60/40 stocks/bonds might drift to 75/25 after a bull run — now you have more risk than intended. Rebalancing sells some stocks and buys bonds to restore the 60/40 target. This counterintuitively improves returns by systematically selling high and buying low. Common rebalancing triggers: calendar-based (monthly/quarterly), threshold-based (rebalance when >5% drift), or event-based.
How Tradewink Uses Rebalancing
Tradewink's PortfolioRiskAnalyzer monitors position and sector weights continuously. When any sector exceeds its concentration limit or a single position grows beyond the maximum allocation, the AI generates rebalancing alerts. The system can also auto-trim positions that have grown significantly above target weight, taking partial profits while maintaining exposure.
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See Rebalancing in action
Tradewink uses rebalancing as part of its AI trading signal pipeline. Start getting signals that use this concept to find real opportunities.