Portfolio Heat Calculator
Add up the risk across every open position to see how much of the account is exposed at once.
Portfolio heat is the total capital at risk across every open position at once, and a portfolio heat calculator adds those separate risks into a single figure. Position sizing is normally applied one trade at a time, which controls each trade in isolation but says nothing about the aggregate.
Formula: heat = total open risk / account balance x 100
Your figures
Optional — the maximum total open risk you allow yourself.
Results
Portfolio heat
4.00%
of the account at risk across 3 open positions
- Total capital at risk
- US$1,000.00
- Remaining capacity
- US$500.00 · 2.00%
- Open positions
- 3
- Average risk per position
- 1.33%
- Largest single position
- US$500.00 · 2.00%
- Balance if every stop were hit
- US$24,000.00
What this means
If every open position stopped out, the account would fall by US$1,000.00 — 4.00% of its current value. Sizing each trade individually controls the risk of each trade, but says nothing about the total. This total is within the limit you set.
- Assumes the positions are independent. Correlated positions can move together and behave like one larger bet than the sum suggests.
- Assumes each stop fills at its price. Gaps can take the loss beyond the figure entered.
Portfolio heat: 4.00%
The link reopens this calculator with the same numbers. Nothing you enter is sent to a server.
Continue with these figures
About the Portfolio Heat calculation
The gap matters. Ten positions each risking a disciplined 1% give a combined risk of 10% of the account exposed simultaneously, and a trader following a strict per-trade rule can arrive there without ever breaking it.
Used as a trading exposure calculator, it adds up the risk on your open positions, expresses it as a percentage of the account, and compares it against whatever limit you set for yourself.
Portfolio Heat formula
total risk = Σ (risk amount per open position)
heat = total risk ÷ account balance × 100
against a limit you set:
remaining capacity = (balance × limit) − total risk
balance if every stop were hit = balance − total risk- risk amount
- Cash lost on a position if its stop is hit — not the position's value.
- heat
- Total open risk as a percentage of the account.
- limit
- A ceiling you choose. This calculator reports against it, it does not set one.
The arithmetic is a sum, but the reason it is worth doing is that per-trade sizing and total exposure are different constraints. A rule of 1% per trade caps the damage from any single position; it places no cap at all on how many positions may be open.
The figure to pay attention to is the balance remaining if every stop were hit simultaneously. It sounds unlikely, and on independent positions it is — but correlated positions do not stop out independently. Six long positions in the same sector, or four currency pairs all short the dollar, tend to move together and behave far more like a single large position.
Correlation is what makes heat worth tracking rather than simply trusting the per-trade rule. The sum assumes independence; reality frequently does not oblige.
Portfolio Heat: a worked example
A $25,000 account with three open positions risking $250, $250 and $500, against a self-imposed 6% heat limit.
- Total open risk250 + 250 + 500 = $1,000
- Portfolio heat1,000 ÷ 25,000 = 4.00%
- Limit in cash25,000 × 6% = $1,500
- Remaining capacity1,500 − 1,000 = $500
- Balance if all stopped out25,000 − 1,000 = $24,000
4% of the account is exposed, leaving $500 of risk capacity before the 6% limit is reached — enough for one more position at the $500 level, or two at $250.
How to use the Portfolio Heat calculator
- Enter your current account balance.
- Add a row for each open position, entering the cash you would lose if that position's stop were hit — not the position's value.
- Set your own heat limit if you use one. The calculator reports against it rather than suggesting a figure.
- Recalculate as positions are opened and closed; open risk is a live number in trading, not a static one.
Limitations of the Portfolio Heat calculator
Every calculation makes assumptions. These are the ones that matter here.
- Assumes positions are independent. Correlated positions can stop out together, so the sum understates the risk of a concentrated book.
- Assumes each stop fills at its price. Gaps take the loss beyond the amount entered.
- Takes the risk amounts you enter at face value. If a stop has been widened since the position was opened, the real risk is higher.
- Does not account for positions without a stop, whose risk is not bounded and cannot be summed.
Frequently asked questions about Portfolio Heat
What heat limit should I use?
That depends on your circumstances and how correlated your positions are, and this calculator does not recommend a figure. What it can tell you is the consequence: at 10% heat, every stop hitting at once costs a tenth of the account, and the recovery required grows faster than the loss.
How is this different from position sizing?
Position sizing controls one trade. Heat controls the total. You can follow a 1% per-trade rule perfectly and still have 15% of the account at risk if fifteen positions are open, which is exactly the situation this calculator is for.
Should correlated positions count more?
Arguably yes, and this calculator does not adjust for it. Six positions that all depend on the same underlying move are closer to one position six times the size. Treating the simple sum as a floor rather than a ceiling is the safer reading.
Does an open profit reduce my heat?
Only if the stop has been moved up to lock it in. Heat is measured against where the stop actually sits, so a position in profit with its original stop still carries its original risk.
Last reviewed . See our methodology and editorial policy.
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