Disclaimer:
The features and tools demonstrated in this video reflect the TradeSmith platform as of the recording date. Please note that our software is continuously updated to enhance your experience. The current site may appear differently.
Hi everyone! I’m Marina Stroud, your Senior Product Education Specialist. Thanks for joining me today!
These monthly Walkthrough Webinars will give you hands-on guidance across all TradeSmith products.
My colleague Kristin Magenst and I host them each month to provide you with a real-time learning experience—so whether you’re just starting or looking to fine-tune your skills, you’re in the right place.
And don’t worry—I am recording today’s session and will post the video and script in the Support Menu under the TradeSmith Walkthrough folder.
Let’s jump right into today’s topics!
Slide 2: Today’s Topics
In this session, I’ll show you how to leverage multiple sources—such as your newsletters, the Billionaires Club, baskets, and more—to build a fully optimized portfolio using the Pure Quant tool.
Note: The Pure Quant tool is available to TradeStops (Elite and Pro), Ideas (Elite), Trade360, Crypto (Premium and Elite), and TradeSmith Platinum accounts.
You’ll also discover how to re-optimize your existing portfolios, ensuring you remain properly diversified and positioned for changing market conditions.
To help you visualize this, imagine a blueprint of a portfolio as a house:
- Step 1: Choose your sources. This is your foundation—the research, strategies, and insights you’ll use to begin construction.
- Step 2: Review the tool’s default settings. These serve as the framework, providing a solid structure to build upon.
- Step 3: Customize the portfolio. This is where you add the walls, rooms, and finishing touches, tailoring the house to fit your exact needs and style.
And once the “house” is built, we won’t stop there. I’ll also show you how to re-optimize your existing portfolios—reinforcing the structure over time so you remain diversified and ready for whatever shifts the market brings.
🎓 Just a Quick Note Before We Dive In!
Slide 3: Disclaimer
Everything we’re sharing today—and in future tutorials—is just for learning and exploration. We're not licensed financial advisers, so we can’t give personal recommendations or advice tailored to your situation. Please think of us as your friendly tour guides through the world of investing tools!
📹 And don’t worry if you miss anything.
We're recording today’s session! You’ll be able to hit replay whenever you like and catch up on anything you didn’t catch the first time.
Awesome—let’s dive in!
I am logged into my TradeSmith Finance Platinum account. Your account may look different than mine depending on your TradeSmith subscriptions.
To access the Pure Quant tool, go to the Pure Quant tab of the Invest page.
On the home screen of the Pure Quant tool, you’ll see a clear record of all the portfolios you’ve previously built. Each entry shows the date and time created, the source(s) you used, the filters applied (tool settings), your investment amount, and the number of positions. The Status column indicates the tool’s progress in building your portfolio.
If you’d like to revisit a past portfolio, click the date and time link to review the results. Please note that these results are static and will not update automatically. If you want refreshed outcomes, you can re-run Pure Quant using the same parameters—sources, filters, investment amount, and number of positions.
When you’re ready to build something new, select the “Build New Pure Quant Portfolio” button. You’ll also find a few pre-built model portfolios available, but in today’s session, we’re going to roll up our sleeves and build our portfolio “house” from the ground up.
There are three key steps to creating your new investment portfolio—and we’ll walk through each one together.
Step 1: Choose your sources.
Let’s review a few of the sources to get you going.
As you can see, there are many sources to choose from. If you want to follow the top hedge funds or billionaires, you can follow the Tradesmith Billionaires Club.
You can start by selecting all the billionaires at once using the “All” button, or choose your favorite gurus individually.
For today’s lesson, we’ll use “All” billionaires as our investment source. As you can see, there are approximately 40 billionaires to follow. You also have the flexibility to include the top-performing holdings from each billionaire portfolio. For example, instead of the default 25 holdings, let’s narrow it to the top 10 positions in each portfolio.
But the Billionaires Club is just one of many available sources. You’ll notice the same flexibility applies to your newsletter gurus. From the drop-down menu, you can include all newsletters or hand-pick your favorites—your menu will only display your active subscriptions.
Beyond that, Pure Quant offers a wide variety of other sources to help you diversify:
- Model Portfolios – Automated portfolios developed for various investment strategies.
- TradeSmith Baskets – Use pre-built baskets or manually created baskets.
- A basket is simply a collection of securities you want to follow regularly for trade or investment opportunities.
- Markets – Build a portfolio using securities from the major U.S. and international markets we track.
- Sectors – Focus on the underlying sector ETFs to capture sector-specific performance.
- Country of Exchange – Limit your portfolio to securities from the U.S., U.K., Canada, or Australia.
- Asset Type – Choose your preferred type: stocks, crypto, indexes, funds, and more.
- Individual Securities – Add tickers directly to ensure the tool includes them, regardless of its rules.
- Portfolios & Watchlists – Draw directly from the portfolios and watchlists you track in TradeSmith Finance.
- ETFs and Mutual Funds – Include ETFs or mutual funds—or even their underlying components.
- The tool does not include ETFs, funds, or their components if they don’t meet Pure Quant’s rules.
- Saved Invest Screener – Select from your saved screeners to build a portfolio. (Requires access to the Screener tool.)
In short, Pure Quant gives you the freedom to mix and match sources, whether you prefer guru portfolios, your newsletters, baskets you’ve curated, or broader market-based inputs.
Okay, what do we have so far?
So far, we have included the top 10 of “All” the TradeSmith Billionaires.
Let’s proceed to Step 2 and review the default settings.
- Health (Long-Term): Green Zone.
- Average VQ for Stocks: 40% or less
- Average VQ for Cryptos: 80% or less.
- Gains: securities must be at a positive gain since they triggered the Health Indicator Entry Signal.
- 1-Year Average Volume: US stocks must have an average daily volume of at least 100,000 shares or more
- 1-Year Average Daily Volume: US stocks must have an average daily volume in price of $2 million or greater.
- Maximize Diversification: minimize portfolio risk through weakly correlated securities.
As you know, volatility is related to returns. However, we also don’t want to take on that risk. We found a way to minimize portfolio risk by utilizing weakly correlated securities, meaning they do not move in tandem - up or down in the market.
When your portfolio is diversified, you can have securities with higher volatility from different sectors and still have a portfolio with a lower overall risk.
- Market capitalization: refers to the total dollar market value of a company’s outstanding shares of stock.
- Mega Cap = $200 Billion or more
- Large Cap = $10 Billion to $200 Billion
- Mid Cap = $2 Billion to $10 Billion
- Small Cap = $300 Million to $2 Billion
- Micro Cap = $50 Million to $300 Million
- Nano Cap = Less than $50 Million
I’ll make sure the Maximize Diversification feature is on—because being diversified is just plain smart. Other than that, I’m not touching a thing.
I want stocks that are healthy in the Green Zone and showing gains since they got there. And risky plays? No thanks—I’m not looking to ride any bucking broncos today.
The last step is to customize our portfolio in Step 3.
You can click on the Customize Portfolio button at the bottom of the page or scroll to the top and click Step 3.
Let’s start by investing $100,000 into 10 positions.
(And remember, you can adjust both the investment amount and the currency to fit your needs.)
For a well-balanced portfolio, we typically recommend holding between 10 and 20 positions—enough to diversify risk without spreading yourself too thin.
At any point, if you want to revisit earlier choices, click back to the step you’d like to adjust.
Before we press the Build Portfolio button, there’s one last feature in Step 3 to review.
Here, you can allocate percentages of your investment across different asset types.
By default, the system allocates 100% to stocks. Since we’re using the Billionaires Club as our data source, it wouldn’t make sense to divide the allocation among multiple assets, because TradeSmith pulls directly from billionaire 13F filings, which only include equities.
For this demonstration, I’ll toggle the allocation setting back to “None.”
When you’re ready, click Build Portfolio.
The Pure Quant tool will display a progress bar as it processes each step. You can keep using the site while it runs, and you’ll get a notification as soon as your results are ready.
Let’s check out our results!
When reviewing your results, remember that these positions are not ranked by “best pick.”
Securities that recently triggered a new Health Entry Signal usually appear higher on the list. However, placement also depends on the Pure Quant formula, which takes into account a security’s average VQ. Our research shows that stocks with a higher average VQ% have generally outperformed those with a lower VQ%.
Image as of Sept. 24, 2025.
It’s important to emphasize that TradeSmith recommends equal-risk position sizing, as reflected in the Risk% per Position column. In practice, this means we allocate the same percentage of our $100,000 trading capital to risk on each trade—not the same dollar amount invested in every holding.
As shown in the Position Size columns, the actual dollar investment varies depending on the risk profile of each security. Typically, you’ll see larger allocations to lower-risk securities, which are more likely to deliver consistent returns over time, and smaller allocations to higher-risk positions.
Image as of Sept. 24, 2025.
For example, consider Lumen Technologies (LUMN) and UnitedHealth Group (UNH). Lumen carries a very high Volatility Quotient (VQ) of more than 65%, whereas UnitedHealth Group’s risk level is significantly lower, at around 22%. Based on these risk profiles, the tool suggests allocating roughly $4k to the high-risk “bucking horse” of Lumen, compared with up to $12k in the more stable, conservative stock.
At the top of your results, you’ll see a snapshot of your portfolio: total value, cash, Diversification Quotient (DQ), Portfolio Volatility Quotient (PVQ), health distribution, and number of positions.
Since the Pure Quant portfolio is designed to stay fully invested, you won’t see any leftover cash sitting on the sidelines.
The DQ score tells you how well your portfolio is diversified. Think of it as a measure of how many “different baskets” your eggs are in:
- 1 – 1.5 = Weak diversification
- 1.5 – 2 = Moderate diversification
- 2 or higher = Strong diversification (this is what we aim for)
Our system gets there by combining stocks from different sectors that don’t move in lockstep. Even if individual stocks are a bit more volatile, the mix helps reduce overall risk.
The PVQ score shows your portfolio’s overall risk level. In this example, the PVQ is 14.29%, which is considered fairly low. For reference, anything up to 15% is seen as low risk.
Note: The PVQ or other metric screenshots, taken on Sept. 24, 2025, may not match the live video demo.
What to do next.
- Validate each pick against your trade plan.
Before placing any orders with your broker, confirm that every security fits your criteria—entry, position size, time horizon, risk and exit rules. - Open the Asset Details page for deeper due diligence.
Click any ticker to jump to its Asset Details page, where you can review key indicators, statistics, company profile, financials, charts, and more. - Save your list for tracking.
Save the results as a new or existing basket (watchlist) or as a new or existing portfolio (positions you plan to track or manage). - Print or export as needed.
Use the Print and Export buttons in the upper-right corner of the page to share or archive your results.
Pure Quant: Re-Optimize an Existing Portfolio
Let’s switch our focus to managing an existing portfolio with the Pure Quant’s Re-Optimize feature.
Step 1: Hit “Re-Optimize my Portfolio.”
Step 2: Select your portfolio.
Step 3: How many positions do you want to add?
Additional positions will be added to the “Total positions count.”
Step 4: Add additional cash (optional)
As you scroll, you’ll reach a section asking whether you want to add cash to the portfolio. This area shows Total Portfolio Value, Available Cash, and the portfolio’s Health distribution. If you add cash, the tool will fully invest it during re-optimization. Afterward, the Total Portfolio Value will include the added cash (cash is counted in the total).
You can toggle fractional shares on or off. A fractional share is simply less than one full share, which lets you invest by dollar amount—for example, $50 in a $200 stock buys 0.25 share. For today’s run, we’ll keep fractional shares disabled.
Step 5: Set your action items
At the bottom of the page, you’ll see your current holdings with an action menu for each position. In most cases, choose Rebalance for positions you want to keep—this keeps the holding and adjusts its share size based on equal-risk position sizing. To exit a position and have the tool find a replacement, choose Close and Replace.
For any holdings in the Red Zone, that’s exactly what we’ll do. You can flip the toggle at the top to “Close all positions in Red Zone”, or manually select Close and Replace for specific Red Zone stocks you’d like to swap out.
Two other controls help fine-tune the results: Lock maintains a position exactly as is (no change to the share count), while Exclude removes a stock from the calculation entirely and does not replace it.
Step 6: Hit the Next button.
Start by choosing your sources. You’ll notice Maximize Diversification is set to Yes by default.
We initially seeded the portfolio with the top 10 performers from the Billionaires Club. Now let’s layer in your newsletters to surface healthy recommendations that can broaden diversification and potentially lower overall volatility.
From the newsletter menu, select All of your active newsletters (the list reflects your current subscriptions).
To narrow the universe, set Asset Type to ‘Stock’. To restrict the stocks to U.S. listings, select "United States" under Country of Exchange.
One more step: tell the tool how to combine these choices. Use the Sources Combination toggle at the top—select All to require that results meet every selected criterion (newsletter picks that are U.S. and stocks). Choose Any if you’re comfortable with a broader set that matches any of your selected sources.
With these settings, the tool will retrieve U.S. stock picks from your newsletters while maintaining maximum diversification.
Step 7: Hit the Build Portfolio button.
As the tool runs, you’ll see a progress bar while it scans your holdings and identifies U.S. newsletter stocks to replace any Red Zone positions.
At the top of the results page, you may get up to three alternative portfolios, with the top shown by default. As a reminder, a DQ of 2 or higher is considered strong.
You can also check the portfolio’s overall volatility. The new re-optimization aims to reduce it; to verify, compare the updated value to your original portfolio’s PVQ on the Manage tab of the My Portfolios page.
Results are organized with new positions at the top, followed by existing positions, and then closed positions. For each, the tool specifies how many shares to buy and how to adjust share sizes on positions you’re keeping.
Image as of Sept. 24, 2025.
TradeSmith does not place trades on your behalf. To act on these results, log in to your brokerage account to resize positions, close positions, and add any new securities.
When you’re satisfied with the plan, you can save the run to a new or existing portfolio or use Print/Download to keep a copy.
To review past work, click “Back to Results List” in the upper-left. You’ll see all of your Pure Quant runs organized by tabs—for example, select Re-Optimized Portfolios to view those results. If the list gets crowded, you can delete runs you no longer need.
Once your portfolio is in place and your exit rules are defined, the real work is ongoing management. Markets move, allocations drift, and some holdings will eventually trigger their exits.
That’s where Re-Optimize My Portfolio earns its keep. Instead of spending hours hunting for replacements and recalculating weights, use Pure Quant to surface healthy candidates, preserve diversification, and keep position risk balanced—all in a few clicks. Make it part of your routine after an exit, a cash change, or noticeable drift, and track the impact with metrics like DQ and PVQ to keep the portfolio on plan.
That’s all for today! Before we go, here’s where you can find all our educational resources.
To access your educational resources, click the Support button on the top right of your program site. The main menu provides information on how to contact our Customer Success team and schedule a 30-minute concierge appointment, which is a one-on-one walkthrough with a knowledgeable agent.
You can also register for and access previously recorded TradeSmith Walkthroughs with Kristin or me, as well as Inside TradeSmith webinars featuring Senior Analyst Mike Burnick.
To ensure the information is relevant and up to date, we will remove webinars that are older than three months.
If you are new to TradeSmith, please check out our Getting Started Series.
At the bottom of the Support menu, you will see three tabs: Main Menu, Product Updates, and Education Center.
📣 The Product Updates tab (megaphone) provides the latest and greatest feature updates so you can be in the know on all site upgrades.
📖 The Education Center (open book) houses our how-to articles, glossary, tutorials, and webinars.
Contact Us
Thank you for joining us! We're honored to support your educational journey. If you have questions, we are here to help.
We look forward to seeing you in the next round. Until next time, bye!
Marina Stroud
TradeSmith Product Education Lead