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Author Bart Bregman

Bart Bregman

Author & Financial Analyst: 9 Years of full-time trading experience. "There is no such thing as a bad trade."

Disclaimer: The information provided on this blog should not be seen as financial advice, and is only intended for entertainment and informational purposes.

How to re-balance your eToro portfolio: Strategies for 2023

Want to maintain your eToro portfolio’s performance in 2023? It’s time to level up your rebalancing game! πŸ’ͺ

Key Takeaways
Rebalancing maintains optimal asset allocation, reducing risks and enhancing returns
Various rebalancing strategies cater to diverse investment goals and risk tolerances
eToro’s CopyTrading and CopyPortfolios offer simplified portfolio management solutions

eToro portfolio balance

πŸ€·β€β™‚οΈ

Table of content

  • πŸ€·β€β™‚οΈ
  • Β Why Rebalancing Matters
  • 🎯 eToro Portfolio Overview: Allocation, Risk, and Exposure
  • πŸ•΅οΈβ€β™‚οΈ Keep an Eye on Your Portfolio Exposure
  • 🧰 Top Rebalancing Strategies for eToro Investors
  • ⏰ Rebalancing at Specific Times (Calendar Rebalancing)
  • πŸ“Š Percentage-of-Portfolio Rebalancing
  • πŸ’° Constant-Proportion Portfolio Insurance (CCPI)
  • πŸš€ eToro Simplified Portfolio Management: CopyTrading and CopyPortfolios
  • πŸ“Š Pros and Cons of Rebalancing Strategies
  • πŸ”§ Crafting Your Rebalancing Strategy for eToro
  • eToro Trading Education: β€’ Learn more about eToro TradingπŸ“
  • Trading Patterns:
  • Portfolio Management:
  • Trading Platform and Security:
  • Fundamental Analysis:
  • GENERAL RISK WARNING
  • Author & Expert Trader - Financial Analyst :

 

Β Why Rebalancing Matters

Portfolio rebalancing ensures your investments align with your desired risk levels and return objectives. Periodically reviewing and adjusting your eToro portfolio helps you avoid excessive risk and underperformance. Don’t let your investments gather dust! 🌬️

🎯 eToro Portfolio Overview: Allocation, Risk, and Exposure

eToro offers a comprehensive overview of your portfolio, displaying your allocations across asset classes, markets, and traders you’ve copied. Check the “Portfolio” section to view pie charts and tables of your investments. πŸ₯§πŸ“Š

Portfolio allocation of nazgulbunny on eToro

πŸ•΅οΈβ€β™‚οΈ Keep an Eye on Your Portfolio Exposure

Understand how much you’ve invested in each asset type or market. Monitor your portfolio exposure to ensure it aligns with your investment strategy and risk tolerance. πŸ”

Portfolio of nazgulbunny on eToro

🧰 Top Rebalancing Strategies for eToro Investors

Choose the best rebalancing strategy for your investment goals and preferences. Here are some popular methods:

⏰ Rebalancing at Specific Times (Calendar Rebalancing)

Review your investments at regular intervals (e.g., monthly or quarterly) and adjust your holdings accordingly. This simple strategy is easy to follow but lacks technical guidance for reallocation. πŸ—“οΈ

This is perhaps the most simple approach, also referred to as calendar re-balancing, and involves reconsidering your investments at specific time intervals to achieve the target asset allocation. For example, you may choose to check on your holdings every month or every quarter to buy or sell several assets. Beware however, that frequent adjustments (like every week) of your holdings may become costly due to transactions costs. The amount of transaction expenses depends on the type of assets, for example investing or opening long positions in stocks (equity) do not involve a charge, however spreads may be charged on other assets like cryptocoins, CFD contracts and so on. It is probably a good idea to consider a balance between the benefits of re-balancing and these transaction costs as well as time constraints. The significant advantage of calendar re-balancing is its simplicity, however it does not provide any technical guidelines on how to actually re-allocate your assets.

πŸ“Š Percentage-of-Portfolio Rebalancing

Maintain a constant original allocation of assets, adjusting the proportion as some assets appreciate more than others. This strategy focuses on risk management but may limit success potential. πŸ“ˆπŸ“‰

Balancing your portfolios on eToro

This is another simple type of a relatively simple re-balancing strategy that focuses on keeping a constant original allocation of assets you invested into that aims at managing risk levels. The deviation from original proportion may come from some assets appreciating more than the others and consequently representing a larger portion of the entire holdings. For example, if you have a 60/40 ratio of risky stocks or cryptoassets to indices in a portfolio and the riskier part keeps raising in value over time, it is going to represent a larger portion of your total holdings and lead to a more aggressive and risky allocation.

eToro allows you also to see the percentage of your holdings each asset class represents under the ‘Portfolio’ exposure overview, like shown on the image below.

Past performance is not an indication of future results.Some investors may decide on a certain range the original allocation may deviate to, for example +/- 3%, after which the portfolio is re-balanced, with some assets sold and additional purchased. The range may depend on the type of asset in question, for example a more volatile asset is likely to require a narrow range spread to ensure they do not represent too much or too little of the total portfolio. The allocation does not necessarily have to be expressed in terms of asset type but also geographical origin of the market (e.g. 30% emerging market, 30% developed economies and 30% domestic assets). It is likewise relatively simple yet this simplicity may also turn out to be a short-coming and make you miss out on potential profit opportunities; this approach is also not indicative of the frequency of re-balancing.

Both the calendar and percentage-of-portfolio rebalancing techniques focus on a constant proportion of assets within a portfolio because its constituent assets’ weights do not change.

πŸ’° Constant-Proportion Portfolio Insurance (CCPI)

Adjust your risk tolerance based on your portfolio’s value. As your wealth increases, you may be willing to invest in riskier assets. Combine CCPI with other techniques for a comprehensive approach. πŸ’Ό

πŸš€ eToro Simplified Portfolio Management: CopyTrading and CopyPortfolios

For those seeking a hands-off investment experience, eToro offers CopyTrading and CopyPortfolios. These solutions automatically manage and rebalance your portfolio according to pre-defined strategies or expert traders. πŸ§‘β€πŸ’ΌπŸ”„

Copyportfolios etoro rebalancing
(Past performance is not an indication of future results.)

πŸ“Š Pros and Cons of Rebalancing Strategies

Strategy Pros Cons
Calendar Rebalancing Simple, easy to follow, regular intervals Lacks technical guidance, may incur transaction costs
Percentage-of-Portfolio Rebalancing Risk management, maintains constant original allocation May limit success potential, unclear rebalancing frequency
Constant-Proportion Portfolio Insurance (CCPI) Adjusts risk tolerance based on wealth, encourages diversification Requires other techniques for comprehensive management, no clear timeframes
CopyTrading and CopyPortfolios Hands-off approach, managed by experts, diverse strategies Less control, relies on the performance of selected strategies or traders

πŸ”§ Crafting Your Rebalancing Strategy for eToro

There’s no one-size-fits-all rebalancing strategy. Consider your investment goals, risk tolerance, and preferences when selecting a method. Weigh the pros and cons of each approach, and don’t forget to factor in transaction costs! πŸ’°πŸ’Ή

Most popular smart portfolios to trade in on eToro

Remember, investing involves capital loss risks, and past performance does not guarantee future results. Always conduct thorough research and consult a financial advisor if necessary. Good luck, and happy rebalancing! πŸ€πŸŽ‰

eToro Trading Education: β€’ Learn more about eToro TradingπŸ“

Trading Patterns:

  • Pigs Hoof Pattern on eToro
  • How to Trade Triangle Pattern on eToro
  • Head and Shoulders Pattern on eToro
  • Double Tops and Bottoms on eToro
  • Bull and Bear Flag Pattern for eToro
  • Cup and Handle Pattern on eToro
  • Diamond Pattern on eToro
  • How to Trade the Parabolic Run-up Pattern

Portfolio Management:

  • How to Grow eToro Portfolio
  • Re-balance eToro Portfolio
  • eToro Portfolio Planning
  • eToro Portfolio and Inflation
  • Importance of Diversification
  • eToro Portfolio During Market Volatility

Trading Platform and Security:

  • Choose the Right Trading Platform
  • Is eToro Reliable?
  • eToro's Security Measures
  • Is eToro Safe?

Fundamental Analysis:

  • Fundamental Analysis on eToro
  • Mastering Fundamental Analysis in Forex Trading
  • What is Fundamental Analysis?
  • Top 10 Fundamental Analysis Metrics
  • How to Do Fundamental Analysis
  • Financial Statements for Fundamental Analysis
  • Earnings Per Share (EPS)
  • Dividend Yields in Fundamental Analysis
  • Calculating Intrinsic Value
  • The Role of P/E Ratios
  • The Impact of Interest Rates
  • Fundamental Analysis to Pick Stocks
  • Pros and Cons of Fundamental Analysis
  • Fundamental Analysis to Successful Investment


Support us by using the eToro sign-up form down below.⬇️

Plus you will get a Free demo account! Thank you!

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GENERAL RISK WARNING

  • β–ΈeToro is a multi-asset platform that offers: Stocks, Crypto assets, and CFDs.
  • β–ΈCFDs are complicated and can make you lose money quickly because of leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. Think about if you understand how CFDs work and if you can afford to take the risk of losing your money.
  • β–ΈPast performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
  • β–ΈCopy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
  • β–ΈCryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
  • β–ΈeToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity-specific information about eToro.
  • Be warned!


Author & Expert Trader - Financial Analyst :

Bart Bregman
My name is Bart Bregman and I am a full-time professional trader with nine years of experience. I specialize in shorter-term trading using technical analysis, and I have extensive experience with Stocks, CFDs, Options, and Crypto trading. I believe that there is no such thing as a bad trade. I'm currently traveling the world as a digital nomad trader. You can follow my journey on Instagram at https://www.instagram.com/bart_bregman/

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