Using the rebalancing application is preceded by choosing the type of report you want to rebalance. You can either choose the daily, monthly or annual one in our Analytical Platform application.

The rebalancing app is then used to create a batch of orders in CSV
format to be uploaded into the Interactive Brokers‘ desktop application, Trader Workstation.

When using the S&P 100 Balanced Strategy for the first time

The portfolio is created by buying the 20 most undervalued stocks taking up 60% of your total portfolio, and selling the 20 most overvalued stocks filling up the resting 40%. The leverage of 1.5 is applied for the whole strategy. For example, when you are trading with USD 100,000 the average price of a single long position is USD 4,500 and the average price of a single short position is USD 3,00.

There are 40 different trades executed in total. The cost of one trade is usually USD 1 so the total cost of executing all the orders should equal USD 40 when using Interactive Brokers.

When you rebalance your portfolio after the first time by adjusting it to the actual report from our StockPicking Lab

There are going to be 0 to 80 orders executed. There would be 0 orders executed if there were no changes in the price of any of the tickers. On the flip side if all the stocks were needed to be replaced there would be 80 orders executed.

Why use the rebalancing application?

Fractional shares

  • The rebalancing app supports buying of fractional shares enabling you to have a balanced portfolio and trade all the shares exactly as stated in the current report.

    For instance, if the price of one share is USD 150.29 and the ideal position is USD 4,500, the application will include the purchase of 29.9421 (= 4,500 / 150.29) shares into the rebalancing order.

Fee limitation

  • The app is built to integrate only orders that wouldn’t be affected by the transaction fee too much. At the moment the limit is set to USD 50 difference from the original price.

    This means that if you have purchased shares for USD 4,500 then the value of the position would only be adjusted in the next rebalance if the value of the new position would be more than USD 4,550 or less than USD 4,450.

    This aims to save on inefficient fees and partially improve the real performance of the rebalanced portfolio.

Have a look at the sample files

The application creates rebalancing orders that are equal for every person trading with the same amount of money. The output is not suitable for any person in particular because it is not considering any personal circumstances of the individual.