Portfolio Heat

Portfolio heat is the total amount at risk across every open position at once — for each trade, the distance from entry to its stop expressed in account currency, all of it added together and read as a percentage of equity. Where risk per trade governs one position, heat governs the whole book. The number is worth keeping because positions are rarely independent. Several longs in different pairs that share a quote currency behave like one larger bet when that currency moves, and a cluster of trades opened on the same idea usually fails together. A heat cap — a fixed maximum share of equity at risk at any moment — turns that into something you check before opening the next trade rather than discover afterwards. It says nothing about whether the trades are good ones; it limits what a bad day can take.