Balance Your Portfolio for Equal Risk & More Profit

The Risk Rebalancer takes a portfolio of stocks and re-balances available capital among the component stocks. This is especially useful so that you can take equal risk per position. It uses our proprietary volatility metric, the Volatility Quotient (VQ), to allocate more capital to less volatile equities and less capital to your more volatile equities.

Today we will show you how to have a balanced portfolio with the potential to make you more while risking less.

Accessing the Risk Rebalancer

To access the Risk Rebalancer, please take the following steps:

• Click on the Research tab (1) in the main menu at the top of the page.
• Click on the Risk Rebalancer (2) in the submenu.

Note that the Risk Rebalancer is available at the Premium level and above, so you won’t see this on your list if you are a Basic or Plus subscriber.

Working with the Risk Rebalancer

This is where the fun starts. You are on the way to creating a balanced portfolio that could help you take less risk and maybe even make more profits.

First, you need to select a portfolio. Click the box (1) on the left side of the screen, and a list of your portfolios will appear. Click on the title of your portfolio to balance that portfolio.

Next, do you want to include cash? Under the yellow video icon, there is a section for cash (2). Click the white box so that it has a green check mark. If there is a green check mark, you are including cash. You can edit the amount of cash by clicking the small Pencil icon.

Then, decide if you want to include dividends (3). Again, you will click the white box to create the green check mark to include dividends. By default, we have this set to NOT include dividends since many of our users have already reinvested their dividends.

Finally, click Rebalance (4). Your results will then appear!

Your Balanced Portfolio

Your results are broken into three sections to make things even easier for you. This way, you can quickly see how your portfolio would change to become more balanced.

1. The first section gives you an overview. Notice how it shows you how much your overall portfolio volatility has gone down. It also tells you the risk per position you’ll be taking.
2. The second section will show you the changes that will happen. We’ll go over that in a little more detail soon.
3. The third section tells you the steps to take. This section makes it really simple to see how many shares you will need to buy and sell to make your portfolio more balanced.

Rebalanced Results – Second Section

The results view will show you all the information you need to know on what the rebalancer has done. It also allows you to tailor the results to your specific situation. It allows you to “Lock” (1) positions that you would like to keep in the rebalance calculations but not adjust the shares of, remove (2) positions completely from the rebalancer calculations, or add new tickers (3) to the calculations.

The columns shown in the results are:

• Actions: Allows you to lock or remove positions
• Symbol
• SSI Status: your position’s current Stock State Indicator
• VQ: Current Volatility Quotient (VQ%) for each long stock in your portfolio
• Latest Close: Latest Close price
• Position Size (dollar value): Amount of money invested in each position
  • Current Size
  • Rebalanced Size
• Position Size (Percentage): The percentage that each position represents in the portfolio(s)
• Current Size
• Rebalanced Size
• Shares: Number of shares in each position
• Current Shares
• Rebalanced Shares- You might notice that we allocate more shares to positions that are stopped out based on the SSI. This happens when those stopped out positions have a lower VQ than those non-stopped out positions with a higher VQ.

IMPORTANT: If you make any changes, such as locking a position or adding a new ticker, you must select Update Results (4) for changes to be included in results.

Actions from this page include:

• Saving as a new portfolio (5)
• Exporting to Excel (6)
• Printing to hard copy (7)

Rebalanced Results – Second Section

The final portion of the Risk Rebalancer is the Steps to Take. This is a clean view to quickly show you what would need to be done to achieve the equalized risk adjustment to your portfolio(s) should you choose to implement this rebalancing strategy.

You can Save this as a New Portfolio (1) in TradeStops, Export to Excel (2) or Print (3) to Hard Copy from this page.

Other Resources for the Risk Rebalancer

If you want to learn even more about the Risk Rebalancer, you can watch a video about it. Just click this link.

You can also read an article by Tom Meyer about how to remove specific positions from the Risk Rebalancer here.
Or, you can read about some of the results TradeSmith saw by using this tool by clicking this link.

Try Building a Balanced Portfolio Today

The Risk Rebalancer helps you to take equal risk per position in your portfolios. Try using it today. You can always keep your balanced portfolio as a watch portfolio to see how it might perform in the market. The best part about this? It doesn’t cost you anything – just a few simple clicks on your computer. Give it a try, and see what results you might create today.

To your success,

Customer Success Team