Lesson 4 of 5

Portfolio rebalancing with allocation ranges

Over time, winners grow as a share of a portfolio and laggards shrink. That gap between current weight and target weight is called drift. Rebalancing is the practice of bringing weights back toward allocation targets you have already chosen.

In Rebalio, rebalancing is a calculation: it compares a balance snapshot with targets and a drift bound you enter. It does not invent targets, pick assets, or decide that a trade is appropriate. You configure allocation targets and review a preview before explicitly approving each rebalance. Dynamic cash, when enabled, adjusts effective targets before drift is calculated. Refreshing balances alone does not submit trades.

Why drift appears

Markets move at different speeds. A holding that rallies becomes a larger percentage of the portfolio even if you never buy more. A lagging holding shrinks as a percentage. Seeing drift clearly helps you decide whether an allocation needs attention.

The inputs Rebalio uses

• Balances and market prices synchronized from your connected spot exchange
• Separate freshness timestamps for balances and market prices
• Target percentages you enter that total exactly 100%
• A relative drift bound you review and choose

Review the available holdings, choose the assets to manage, and set their whole-number target percentages and a drift threshold before saving. Dynamic cash is optional and requires a reference amount and rules you choose.

How the math works

• Current weight — an asset’s value in the allocation currency ÷ value of all managed assets
• Percentage-point drift — current weight − target weight
• Relative drift — percentage-point drift ÷ target weight (so percentage points and relative percentages are not confused)
• Relative band — target × your relative bound

Illustration only: a user-entered 50% target with a 10% relative bound describes a band from 45% to 55%. Those numbers are not defaults or recommendations.

When a weight sits outside the band you entered, a quantity difference can be derived by dividing the value gap to target by the supplied price. Trade previews account for estimated fees, available balances, and market size constraints. They do not model taxes or guarantee liquidity or fills.

Entering targets well

• Give every managed asset an explicit percentage; a zero target can propose selling its managed holding
• Make percentages total 100%
• Enter the relative drift bound yourself
• Include zero-held assets when they belong in your target
• Provide a current price for every target asset when running a calculation—including zero-held assets

Targets stay as you left them until you replace them. Adding or removing an asset does not silently redistribute other percentages. A valid total is arithmetic validation, not an endorsement of the allocation.

Snapshots, display, and execution

1. Rebalio synchronizes your connected exchange account in the background.
2. You save allocation targets and review drift using the latest available snapshot.
3. Create a fresh preview to review proposed orders, omissions, and funding limitations.
4. Approve that preview within its validity period. Rebalio checks current data again and submits approved sells before buys.
5. Check order receipts. Partial or uncertain outcomes block further placement until resolved. After a restart, continuing unfinished placement requires explicit approval to continue. Uncertain submissions are never blindly retried.

Credentials are encrypted with AES-256-GCM in the encrypted database on your own host and retrieved only for server-side exchange operations. Balance synchronization never initiates trading. Open orders are not assumed to fill; pending and uncertain orders block conflicting execution.

Limits of the calculation

Previews depend on exchange data and configured assumptions. Prices and balances can change before submission. Fees, minimum sizes, available balances, and available funds are checked, but taxes and future liquidity are not predicted. A preview is not investment advice or a fill guarantee.

Practical habits around the numbers

• Revisit targets when your goals or risk tolerance change—not every time a chart moves
• Treat drift bands as your rule, documented on purpose
• Review exchange fees and consider tax effects before approving trades
• Keep emergency cash and long-term risk capital conceptually separate (see safety net)

Important: Rebalio provides calculations, not individualized investment, tax, or legal advice. Investing involves risk, including loss of principal.

Cash and execution limits

Buys use available managed cash. A pending or partially filled sell is not treated as fully available proceeds. Exchange minimums, fees and changing balances may prevent an approved order from being placed; Rebalio shows omissions rather than silently resizing it.

Stop prevents further submissions and attempts to cancel acknowledged outstanding Rebalio orders. It cannot reverse fills. Changing targets requires active execution to be stopped or completed, followed by a fresh preview. Monitoring does not maintain standing buy/sell pairs or schedule future trades.