Monthly rebalancing is the practice of adjusting a portfolio's holdings back to a target composition on a fixed schedule. Without it, your best performers gradually crowd out everything else, and the original investment thesis drifts away from what your actual positions reflect.
Why portfolios drift without rebalancing
A portfolio that starts equally weighted across 20 names looks very different six months later. The names that ran hard now make up a disproportionate share of the value; the laggards have shrunk. The composition no longer matches the AI signal that chose those names in the first place.
Drift is silent. Nothing breaks. You just own a different portfolio than the model intended — one that reflects past performance rather than current opportunity.
How monthly rebalancing works in VelaDeck
Most strategies in VelaDeck update their composition once a month. The AI reassesses the universe of eligible stocks and produces a ranked list. Some names stay, some get dropped, new ones appear. Occasionally a holding that stayed gets reweighted.
Each of those changes becomes a signal: BUY a new entrant, SELL a dropped name, REWEIGHT a name whose target allocation shifted. VelaDeck tracks the full composition diff and translates it into typed orders sized against your USD notional.
Visit the [strategies page](/strategies) to see the current holdings count and rebalance cadence for each strategy.
The signal pipeline: ingest, plan, execute
VelaDeck runs a background job each day that pulls the current composition of every supported strategy. It compares today's list against yesterday's and emits the diff as typed signals.
- **BUY** — a ticker appeared in the composition that wasn't there before. An order is generated using the notional USD you've assigned divided by the number of holdings. Fractional shares are supported, so the full dollar amount gets deployed.
- **SELL** — a ticker dropped out. The order uses your actual position quantity so VelaDeck never over-sells.
- **REWEIGHT** — a ticker stayed but its target allocation shifted. A follow-up buy or partial sell closes the gap.
Every order gets a deterministic `client_order_id` derived from the signal. If the executor runs twice on the same signal — say a cron double-fired — Alpaca rejects the duplicate and VelaDeck marks the row as `sent_dedupe` rather than double-buying. Idempotency is handled automatically.
Sizing: equal-weight by default
When the strategy doesn't provide per-ticker weights, VelaDeck divides your notional evenly across all holdings. A $2,000 allocation to a 20-name strategy sends $100 per new BUY signal. This is a predictable default that avoids concentration risk and keeps order sizing transparent.
If the strategy provides target weights, VelaDeck uses those instead and the notional splits proportionally.
One exception: the WB15 quarterly cadence
WB15 — Best of Buffett is the only strategy in the catalog that rebalances quarterly, not monthly. Lower turnover, longer holding periods. If you allocate capital to WB15, expect fewer signals — roughly one rebalance event per quarter rather than twelve per year. The planned orders still appear on the dashboard the same way; the cadence is just wider.
The other five strategies — US20, IT15, SP20, DOW10, and MM20 — all rebalance monthly. For strategy details, see the [strategies page](/strategies).
Paper first, live when you're ready
By default every order VelaDeck generates is a dry-run: planned and tracked, but nothing submitted to Alpaca. You can inspect the full planned order list — ticker, direction, notional, status — before deciding to activate execution.
When you're ready, you opt into live trading in Settings. The pipeline is identical; the only difference is that planned orders get posted to your actual Alpaca account. VelaDeck does not custody your funds — they stay in your own brokerage account. Live trading is off by default, and turning it on is a decision you make explicitly.
For a step-by-step walkthrough of the transition, see the [paper to live trading guide](/blog/paper-to-live-trading-safely).
The monthly cap: your spending limit per rebalance
If you set a monthly cap on a strategy, VelaDeck enforces it per calendar month. Say you assign $5,000 to US20 and set a $1,500 monthly cap. The executor fills the first $1,500 of new BUY signals in the month and marks the rest as `skipped_over_cap`. Those skipped orders are visible in the dashboard — you always know why a signal didn't execute.
This gives you a predictable bound on deployment if a strategy has an unusually busy rebalance month.
What happens if I miss a monthly rebalance?
Nothing manual is required. VelaDeck pulls the composition every day, so when the strategy next updates its holdings the new signals appear automatically. You don't need to log in on any particular date.
Can I see the planned orders before they execute?
Yes. Every planned order is written to the dashboard with its status — `planned`, `sent`, `filled`, `skipped_over_cap`, or `sent_dedupe`. In paper mode you can inspect the full list with no trades going live.
Does rebalancing cost anything per trade?
Alpaca offers commission-free trading on US equities, including fractional shares. VelaDeck charges a flat annual subscription and takes no cut per trade. Explorer tier is free for Alpaca balances under $1,000. [Create an account](/signup) to see all tiers.
How is monthly rebalancing different from just holding the original picks?
Buy-and-hold locks in your initial weights and lets drift accumulate. Monthly rebalancing resets to the current AI signal — dropping names the model no longer favors, adding new ones. Whether that produces better results in any given period depends on the strategy and market conditions. The [backtest simulation](/blog/backtest-simulation-explained) shows how your particular mix would have behaved historically; it's not a forward guarantee.
What's the difference between a SELL signal and a REWEIGHT signal?
A SELL signal means the ticker was dropped from the strategy entirely — VelaDeck closes the full position. A REWEIGHT signal means the ticker stayed but its target weight changed, so a partial buy or sell adjusts the holding toward the new target. You'll see both types in the planned orders list with direction and notional clearly labeled.