Smart rebalancing is a method to distribute funds across strategies within a pack. As strategies within the same pack gain/lose at different rates, smart rebalancing ensures the same % weight of funds is maintained.
How does the 'smart rebalancing' work?
For every trade, profit is only allowed to compound for the percentage-wise allocation of the strategy. A different way of phrasing would be to say that all profits are distributed to other strategy allocations within the pack.
On top of this, there are a couple of smart algorithms at play. Whenever a loss occurs before preserved profits are used by all other strategies in a pack, the preserved profits will be partially used to offset the loss made. Next to this, if a loss occurs and there are no preserved profits, then the next trade will be allowed less allocation depending on the size of the loss.
In case of a losing streak, this means that every subsequent loss will get less and less allocation until losses are made back again. This feature will not trigger unless there is no preserved profit available. So if your pack doesn't make a loss more than every so often you won't see this feature activate. But when things turn sour, and your strategies have a bad period, this is in place to safeguard your funds.