I created OBJECTIVELY the most advanced algorithmic portfolio rebalancing tool in the world.
I think about this quote from Mark Zuckerberg’s every single day.
“Ideas don’t come out fully formed. They only become clear as you work on them.” – Mark (source)
I thought about this when I built NextTrade, an open-source algorithmic trading platform.
I thought about this when I built NexusTrade, an integrated LLMs for both financial analysis, sentiment analysis, and algorithmic trading.
Using NexusTrade to get recent news data about particular stocksAnd that quote has been ringing in my head all day, as I’ve begun to roll out the most advanced portfolio rebalancing tool that the world has ever seen.
What is portfolio rebalancing?
Portfolio rebalancing is the process of periodically adjusting the composition of an investment portfolio to maintain a desired asset allocation. When investors initially create a portfolio, they typically select an allocation of various asset classes — such as stocks, bonds, commodities, or cryptocurrencies — to align with their risk tolerance, investment goals, and time horizon.
However, as the market fluctuates over time, certain assets may grow disproportionately compared to others, causing the portfolio’s to drift away from its original target.
For example, consider an investor who initially allocates 60% of their capital to TQQQ and 40% to cash. If the stock market experiences significant growth, the investor’s portfolio might shift to 75% TQQQ and 25% cash. This unintended drift could increase the investor’s risk exposure beyond their comfort zone.
Portfolio rebalancing corrects this imbalance by selling portions of assets that have become overweight and reallocating the funds into underperforming or underweighted assets, thus restoring the original balance.
What are the challenges with portfolio rebalancing for a no-code platform?
Currently, there are very few sophisticated portfolio rebalancing tools. There are good reasons why.
For example:
- When will the rebalance trigger? Unless the rules are extremely simplistic (such as at regular time intervals or asset allocations), it’s nearly impossible to define conditions for when it will trigger
- How will we allocate it? Again, unless these are fixed, most tools don’t have the ability to express an advanced strategy
- How do we test these allocations? For any of the tools that do exist, it’s impossible to actually see if these allocations are reasonable and work in different market conditions
In fact, from my research, I have not found a single tool that doesn’t have these issues. Not. One.
So when building the portfolio re-balancing functionality for NexusTrade, I made sure I created something truly different.
Why is NexusTrade the most advanced portfolio rebalancing tool in the world?
Creating a highly complex rebalancing strategy that rebalances based on the ratio of a stock’s net income to their revenue using natural languageSimply put, NexusTrade solves ALL of the inherent problems with portfolio rebalancing. You can control how you rebalance, the relative weights, and when the rebalance should trigger.
You can do ALL of this… with just natural language.
You can also create simple rebalancing rules, such as “Rebalance the Magnificent 7 every month”With NexusTrade, you’re not limited to just “rebalancing actions”; you can also add buy and sell rules to your investing strategy. No matter what strategy you create, the performance of it is automatically backtested on historical data, so you have an idea of exactly how the portfolio performed in the past.
You can combine rebalance action with traditional buy and sell actions tooThe architecture for this is extremely extensible. You can, quite literally, rebalance a portfolio based on indicators you would never have imagined. This includes moving averages, fundamental indicators, price-based indicators, earnings data, and more.
You can even do arithmetic operations to create portfolios that you will NEVER see in any other investing platform.
Rebalancing the Magnificent 7 based on the “z-score” of its price With this architecture, the possibilities are almost endless. However, the solution isn’t perfect for two key reasons.
Limitations of the Rebalancing Architecture
The rebalance action in NexusTrade is revolutionary, but with its extensibility comes high complexity. Some little things about the action are hidden under the hood, away from the user. For example:
- If multiple rebalance actions are triggered at the same time, only the first one is executed
- If a rebalance action is triggered, buy and sell actions cannot be triggered at the same timestep
Additionally, building the entire “rebalance action object” is complex. While the process is abstracted away due to LLMs, it can make mistakes.
Finally (and most importantly), the rebalance action depends significantly on accurate data.
Fortunately, I rely on a high-quality data provider, EODHD, for the data in NexusTrade. Nevertheless, as with ANY provider, mistakes and bugs are possible. When an investor creates a strategy using the rebalance action, they have to be certain that the strategy is being triggered correctly. This requires more attention to detail than other types of trading strategies.
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Concluding Thoughts
NexusTrade’s portfolio rebalancing tool will literally change the game when it comes to “what is a trading strategy”. No other platform in the world can offer the combination of power, flexibility, and ease of use that NexusTrade provides. With natural language processing, you can create sophisticated rebalancing strategies that were previously only available to hedge funds and institutional investors — if they existed at all.
Like Mark Zuckerberg said, ideas don’t emerge fully formed. The journey from NextTrade to NexusTrade has been one of constant evolution and pushing boundaries. What started as a no-code algorithmic trading platform has transformed into something far more powerful: a comprehensive system that gives everyday investors the tools they need to create truly sophisticated investment strategies.
Is it perfect? No. The complexity that enables its power also requires careful attention and understanding. But that’s the trade-off for having something genuinely revolutionary at your fingertips. For investors who are willing to put in a bit of effort in order to outperform the market, the rewards can be extraordinary.
I’ve been using these strategies in my own portfolio, and the results speak for themselves. The ability to create custom rebalancing rules based on fundamentals, price action, or any combination of factors has completely transformed my approach to the market.
So what are you waiting for?
Join NexusTrade today and get access to the world’s most advanced algorithmic trading platform. Create strategies you won’t find anywhere else, backtest them against historical data, and deploy them with confidence.
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