[AI Rebalance] The Role of Rebalancing Conditions, Asset Allocation, and Take-Profit / Stop-Loss Ratios

In the AI Rebalance, three parameters — Rebalancing Conditions, Asset Allocation, and Take-Profit / Stop-Loss Ratios — determine how your portfolio behaves under different market conditions. These settings directly affect the balance between risk and return, as well as how often your strategy operates. By configuring them appropriately, you can optimize both long-term profitability and stability.

1. Rebalancing Conditions define when the system adjusts your portfolio.

This rule governs how frequently holdings are rebalanced to maintain the preset weight of each asset. There are two main modes: By Percentage and By Time Interval.

• When rebalancing is set by percentage, the system monitors how much each token’s actual weight deviates from its target allocation. Once the deviation exceeds a defined threshold — for example, 5% — the system automatically sells a portion of the over-weighted token and buys the under-weighted one. This approach helps capture short-term volatility opportunities and ensures that profits from rising tokens are redistributed to undervalued ones. It’s especially effective in markets with frequent price swings, preventing a single asset from dominating your portfolio and concentrating risk.
• When rebalancing is set by time interval, the system adjusts the portfolio at fixed periods — such as every 7 or 15 days — regardless of how much prices have moved. This method is suited for calmer markets where volatility is low. It helps reduce trading frequency and transaction fees, maintaining efficiency without responding to every minor fluctuation. For most beginners, using percentage-based rebalancing with a moderate threshold (around 5%) is recommended, as it naturally adapts to most market environments and requires no manual intervention.

2. Asset Allocation determines what to hold and shapes the core structure of your portfolio.

It defines the initial weight assigned to each token — for example, 40% ONE, 30% BTC, and 30% ETH — and directly impacts both your potential returns and drawdown risk.

• A portfolio heavily tilted toward high-volatility assets such as smaller altcoins (with allocations above 60%) tends to offer higher potential gains but also greater exposure to losses. This aggressive setup suits users with strong risk tolerance and short- to medium-term return goals.
• By contrast, portfolios dominated by stable assets such as BTC and ETH (around 70% or more combined) are far more resilient during downturns. Their price movements are smoother, offering a more consistent performance curve that’s better suited for long-term or conservative investors.
  For users seeking balanced growth, combining major assets with quality platform tokens — for instance, 40% BTC, 30% ETH, and 30% ONE — can achieve both stability and growth potential while maintaining diversification.

3. Take-Profit and Stop-Loss Ratios define when to exit a strategy and are the boundaries that lock in profits or limit losses.

• The Take-Profit Ratio determines the profit level at which the system automatically closes all positions, converting unrealized gains into realized profit. For example, if you set a take-profit level of 15% and the portfolio value rises from 10,000 to 11,500 USDT, the system will sell all assets and secure the 1,500 USDT gain.
• The Stop-Loss Ratio, on the other hand, defines the maximum acceptable loss. When total returns fall below a preset negative value — say, −8% — the system liquidates all holdings to prevent further drawdowns. If a 10,000 USDT portfolio drops to 9,200 USDT, the strategy exits automatically, capping the loss at 8%.

When setting these boundaries, it’s important to match them to your investment horizon and risk appetite.
In short-term strategies of three to six months, a take-profit range between 10% and 15% is typically achievable without excessive waiting. Setting targets too high may cause you to miss profitable exits.
For long-term strategies held over a year or more, take-profit targets between 20% and 30% allow enough room for growth while still protecting gains when markets reverse.

For stop-loss levels, conservative users should keep limits between −5% and −8%, ensuring that any single downturn remains manageable. Traders with higher risk tolerance can widen this range to −10% or −12%, giving their portfolios more room to fluctuate and recover from temporary declines. The goal is always the same: to protect capital during extreme volatility while allowing your assets to compound steadily when conditions are favorable.

Together, these three parameters form the foundation of the AI Rebalance. The rebalancing condition keeps your holdings aligned with your plan, the asset allocation defines your exposure and diversification, and the take-profit / stop-loss ratios secure results within a controlled risk framework. When set thoughtfully, they allow your portfolio to grow steadily through market cycles — with minimal manual effort and maximum consistency.