As we discussed last week, a number of TradeStops members want to integrate all of the new TradeStops features into their trading, but felt they were a little behind the curve with all of the upgrades we’ve introduced lately.

Last week, we focused on the SSI signals. This week we’re going to take a look at the Risk Rebalancer.

We introduced the Risk Rebalancer not quite a year ago. At the time, there was nothing like it available to individual investors and there still isn’t. We have a large number of TradeStops members who are professionals in the investment industry and they still don’t have anything like this available to them at their firms.

For those new to TradeStops, the Risk Rebalancer is a tool that works on a portfolio level. It looks at the stocks that you have in your portfolio(s) and equalizes the dollar risk that you take in each position. For instance, if you want to take $1000 risk in Johnson & Johnson (JNJ), you could buy $8460 of stock or 71 shares. JNJ is a low risk stock with a Volatility Quotient of only 11.73%.

But if you want to take the same $1000 risk in Agnico Eagle Mines (AEM), a gold mining stock, you could only buy $$2430 of stock or 52 shares. AEM is a high risk stock with a Volatility Quotient of 40.69%.

When we first introduced the Risk Rebalancer, it allowed you to analyze your portfolios one at a time. Here’s a screenshot of what it looked like, then.


You would pick the portfolio you wanted to analyze, decide if you wanted to invest more cash from your account, and then click on the “Rebalance” button.

The Risk Rebalancer told you what the outcome needed to be allowing you to determine the number of shares to buy or sell for each position.


And this was the overview of the portfolio statistics:


This was groundbreaking information at the time it was introduced. It still is. But it feels almost quaint compared to where we are today.

The homepage of the Risk Rebalancer still has the same layout, but there are some additional choices to be made. You can still choose to rebalance a single portfolio.


Or you can choose multiple portfolios by clicking on the “Select multiple portfolios” link at the bottom of the dropdown menu. A separate window opens up and you can see the portfolios that you choose to rebalance as a single portfolio.


Once we click the “Rebalance” button, the output is more detailed and, at the same time, easier to understand. There are three tabs. The first one shows the changes that were made on the portfolio level.


And further down, it shows you the percentage breakdown of your risk allocation.


The second tab shows you the results of the rebalancing on your individual stocks.


If you don’t want to make any changes in a specific stock, all you have to do is click on the “lock” icon to the left of the stock symbols. And if you want to exclude a position from the rebalancing, just click on the “X” icon.

You can also see the effect if you add a stock. Click on “Add another ticker” and a new window opens up. Enter the ticker symbol(s) and then the amount of additional funds you want to add, if any. After that, click on the “Save and Rebalance” button and the Risk Rebalancer will reconfigure the new portfolio.


The third tab on the right hand side gives you detailed instructions to take if you want to execute the changes determined by the Risk Rebalancer.


At the top of the Risk Rebalancer page is a new feature titled “Show advanced options”. Clicking on this opens up a new window that allows you to exclude all of the stocks that have red SSI Stop signals.


Go ahead and play around with it. You can’t break the program. Our studies have shown that portfolios constructed to equalize risk are better performing than portfolios that have too much money invested in risky positions. TradeSmith focuses on this in his investment editorials and during live presentations. Over time, you are very likely to make more money by “right-sizing” your portfolios the TradeStops way.

We are continuing to work behind the scenes to make the Risk Rebalancer an even more powerful tool. In today’s world of fintech and robo-advisors, TradeStops continues to lead the way in helping investors understand and successfully manage stock and portfolio risk for the long term.

Tom Meyer,
Member Services, TradeStops