$ qubo learn portfolio/01

Rebalancing without overtrading

Rebalancing means bringing portfolio weights back toward chosen targets after prices have moved them. Without it, the best performers slowly take over the portfolio.

Two common approaches exist. Calendar rebalancing checks weights at fixed dates, such as every quarter. Threshold rebalancing acts only when a weight drifts beyond a band, for example 5 points from target.

Every trade has costs: fees, spreads and, in many countries, a taxable event. Rebalancing too often can cost more than the drift it corrects.

Rebalancing is a method to keep a chosen allocation. It does not say what that allocation should be.

// rule to remember

// your turn

Set a target weight for each of your main positions and note which ones are more than 5 points away.

Educational content only. Not investment advice. Past data does not predict future results. Risk disclosure