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  1. Home
  2. /Glossary
  3. /Rebalancing
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Rebalancing

Adjusting your portfolio back to its target allocation by buying underweight assets and selling overweight ones.

Definition

Adjusting your portfolio back to its target allocation by buying underweight assets and selling overweight ones. If your target is 50% BTC and 50% ETH, but BTC outperformed and is now 70%, you'd sell some BTC and buy ETH. Regular rebalancing can improve risk-adjusted returns over time.

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Related Terms

Portfolio

Your collection of investments across different assets.

Diversification

Spreading investments across different assets to reduce risk.

Asset Allocation

How you divide your investments across different asset classes like stocks, bonds, crypto, and cash.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Arbitrage

Profiting from price differences of the same asset across different markets.

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