Two common approaches
- Calendar rebalancing. Review and reset weights on a fixed schedule, such as every quarter or once a year. It is simple and predictable, and it can trade when nothing has changed.
- Threshold rebalancing. Act only when a holding drifts beyond a set band. It trades less often and responds to real drift, but it needs monitoring.
One widely used heuristic for threshold bands is to rebalance when an asset moves five percentage points from a target of 20 percent or more, or a quarter of its target weight when the target is smaller. Treat it as a starting point, not a rule.
Costs and tax
Every rebalance can cost you in trading fees, spreads and, in taxable accounts, realised gains. Before you sell a winner to restore a target, consider directing new cash to the underweight holdings, and check the tax treatment in your jurisdiction.
Rebalance for risk, not for feelings
The reason to rebalance is that drift has changed the risk you carry. A single stock that has grown from 5 to 20 percent of a portfolio changes the outcome of a bad year. Writing a rule for maximum weight makes that change visible before it becomes a surprise.
How Atradian helps
Atradian can't rebalance for you, and it doesn't tell you what to trade. You can write a rule for maximum position weight or top-three concentration in portfolio monitoring. When a holding breaches the rule, the brief flags it so you can decide what to do.