---
title: "Ranking-Based"
description: "Ranking-Based is an allocation method that sorts holdings by a chosen metric at each rebalance and pays every rank tier the relative weight you set."
canonical_url: "https://fincanva.com/docs/strategies/ranking-based"
last_updated: "2026-09-23"
md_url: "https://fincanva.com/docs/strategies/ranking-based.md"
---

# Ranking-Based

Ranking-Based is an [allocation method](/docs/strategies/allocation-and-allocation-method) that sorts a strategy's holdings by a ranking metric you choose, splits the sorted list into ten rank tiers, and pays each tier the relative weight you set for it. Because the sort is redone at every [rebalance](/docs/backtesting/rebalance), weight follows rank rather than staying attached to a particular instrument: an instrument that climbs the ranking gains weight, and one that falls loses it.

**Also seen as:** rank weighting, decile weighting

## How does Ranking-Based assign weights?

Ranking-Based ranks every candidate by the selected metric, highest value first, and then pays each rank tier the weight you typed for it. The tiers are deciles: **Tier 1** is the top 10% of the ranked list and **Tier 10** the bottom 10%. Weights are relative, not percentages — the app says "Weights are relative — any number from -999 to 999, decimals allowed. A negative weight holds that tier short." The ten tier weights are normalised to 100% of the sum of their sizes before capital is assigned, so 50/30/20 and 5/3/2 describe the same allocation, and a negative tier weight counts towards that total by its size. A tier left at 0 receives nothing, which is how the weakest ranks are dropped from the strategy entirely; a tier with a negative weight is held as a short position, its [direction](/docs/strategies/direction-long-only-long-short-short-only) given by the sign.

The sort direction is always highest-value-first, whatever the metric measures. That is worth reading twice for the risk metrics: rank on Volatility and Tier 1 holds the *most* volatile instruments, not the calmest.

## Which ranking metrics can you choose?

Five ranking metrics are available inside a single strategy. A Combined offers the same list without P/E Ratio.

| Ranking metric | Sorts on | Reads the calculation window? |
|---|---|---|
| Price Change | recent price change | yes |
| Average Momentum | average momentum | no |
| Volatility | [volatility](/docs/analysis/volatility) | yes |
| Sharpe Ratio | [Sharpe ratio](/docs/analysis/sharpe-ratio) | yes |
| P/E Ratio | price-to-earnings ratio | no |

**Average Momentum** ranks on [average momentum](/docs/strategies/average-momentum) — the average of an instrument's percent price change over 1 month, 3 months, 6 months and 12 months. It is the one ranking metric that blends several spans instead of reading a single window, which is why it ignores the calculation window entirely. Two consequences show up in a ranking: an instrument is not ranked on average momentum until it has 12 months of price history behind it, because until then the longest of the four spans reaches past the start of its history; and because three of the four spans are long, an instrument's rank moves more slowly than its price does.

## What does the shape of the rank weights change?

The shape of the ten tier weights controls how concentrated the strategy is, independently of the metric. A steep drop from Tier 1 to Tier 10 pushes most of the capital into the best-ranked names and leaves the strategy effectively holding a handful of positions; a flat set of weights makes Ranking-Based behave like equal weighting, since rank no longer changes the payout. Tiers left at 0 drop out entirely, so a curve that zeroes the bottom half is acting as a filter as well as a weighting. This describes what each shape does — Fincanva does not recommend a shape or a metric.

## What happens if every tier weight is zero?

A Ranking-Based setup whose ten tier weights are all 0 invests nothing: every tier receives nothing, so no instrument is held. Fincanva lets you save it, but the totals line reads "Total raw: 0 · Invests nothing — every weight is zero" and a yellow warning appears — "This allocation invests nothing: every weight is zero, so no capital goes anywhere." — which you can accept like any other warning. A fresh Ranking-Based setup starts in exactly this state, so the warning shows until you apply a preset or type a weight.

## Defaults in Fincanva

- **Ranking-Based is included from the Starter plan**, at the strategy level and inside a Combined alike; the Free plan does not offer it in either place. See [what each plan includes](/docs/account-security/what-each-plan-includes).
- The default ranking metric is **Price Change**.
- A fresh Ranking-Based setup starts on the **Equal Weight** preset — the same weight on all ten tiers — so it invests from the start, spreading capital evenly whatever the rank. Apply another preset or type your own numbers to make the ranking tilt the allocation. **Clear** returns every tier weight to 0.
- The presets shipped today are Equal Weight, Balanced Top Tilt, Strong Top Tilt, Top 3 Equal, Top Decile Only and Linear Decay, plus the advanced Soft Exclusion, Top Half Tilt, Contrarian / Inverse Rank and Barbell.
- Inside a strategy each tier weight can be any number from −999 to 999, decimals included, and exactly ten are kept — one per tier. A number outside that range is not changed for you: the field shows "Enter a rank weight between -999 and 999." until you correct it.
- Ranking-Based works at both levels: inside a single strategy it ranks instruments, and inside a Combined it ranks the member strategies — see [Combined weighting](/docs/strategies/combined-weighting).
- Price Change, Volatility and Sharpe Ratio read the [calculation window](/docs/strategies/calculation-window); Average Momentum and P/E Ratio do not, so changing the window leaves those two rankings unchanged.

## Worked example

A strategy holds ten instruments and ranks them by Price Change over a 12-month calculation window. With ten instruments and ten tiers there is exactly one instrument per tier. You type 50 in Tier 1, 30 in Tier 2, 20 in Tier 3 and leave Tiers 4 to 10 at 0. The raw total is 100, so the best-ranked instrument takes 50% of capital, the second 30%, the third 20%, and the remaining seven are not held at all. At the next rebalance the ranking is recomputed: if the previous leader slips to third, its weight falls from 50% to 20%, and whichever instrument now ranks first takes the 50%. Nothing about the instruments changed the weights — only their positions in the sorted list did.

*Ranking metrics describe historical, simulated behaviour, not future results. Fincanva provides no financial advice — see [Is this financial advice?](/docs/investing-theory/is-this-financial-advice).*