Partial Portfolio Allocation

No Need to Go All In.

In real-world trading, it’s often wise to avoid committing your entire portfolio to a single position. This page covers the principles and strategies behind trading with a fraction of your portfolio (I.E. 50%) while keeping the remainder in cash.

What Does a Fractional Signal of 0.5 Really Mean?

A signal of 0.5 represents allocating 50% of your portfolio to a position while keeping the other 50% in cash. It’s a way to maintain exposure to the market while managing risk:

data['signal'] = .5

Note

Your signal doesn’t have to be .5! Trading signals can even be specified up to four decimal places.

For example, to allocate 12.23% of your portfolio, set the signal to .1223. To allocate 55% of your portfolio, set the signal to .55. You get the point.

What Do Consecutive Signals of 0.5 Mean?

If a strategy produces a 0.5 signal multiple days in a row, it does not mean that the portfolio is rebalancing daily. Instead, it means:

• On the first day, 50% of the portfolio is allocated to the position.
• On subsequent days, no further action is taken unless the signal changes.

The portfolio only rebalances when the signal changes—whether to 0.6, 0.4, or even 0.501. Any shift triggers an adjustment to the portfolio’s allocation.

To Summarize

A $10,000 portfolio with a 0.5 trading signal will be allocated as follows:

• $5,000 invested in the selected asset
• $5,000 held in cash

This allocation remains unchanged until the signal shifts away from .5, triggering a rebalance.

A Note on Examples

Most of our examples focus on all-in trading signals of -1 or 1, but we’re expanding on this!

Check out this example for inspiration on scaling your allocation based on confidence.

This feature can be incredibly useful—whether you’re making a full buy-in or a more cautious allocation. We encourage you to experiment with the existing examples and introduce middle-ground cases where your signals are less decisive than a full commitment.