Asking to confirm and because I could not find a help section in the web site that has an answer...

How does rebalancing work for the performance chart of a portfolio?

Does "rebalancing" mean selling stocks that have gained in value above their individual target weights and moving the profit (extra value) into stocks that are below their individual target weights?

E.g. "The portfolio is rebalanced every 3 months."

Does this mean that every 3 months (on the last trading day), a portion of the better performing stocks is sold and then the money goes to buying more of the stocks that did not perform as well?

Yes, that’s the basic idea of rebalancing. In a time-based rebalancing approach (for example, every 3 months), you look at how each holding’s actual allocation compares to its target allocation. If certain stocks have grown to exceed their target weight, you sell enough of them to bring those positions back to the desired level. That freed-up cash is then used to buy positions that have fallen below their target allocations.

In other words, rebalancing works to keep your overall portfolio allocation in line with the targets you initially set, whether that’s to maintain a certain risk level or to stick with a particular strategy. It can feel counterintuitive (selling “winners” to buy “losers”), but it’s all about staying consistent with your chosen allocation.