← Glossary

Portfolio heat

Portfolio heat sums the open risk of every open position and divides by account equity — the account-level version of dollar risk, tracking how much you'd lose in total if every stop were hit at once. It falls as stops move to breakeven or better, since a position with its stop at or past breakeven contributes zero open risk regardless of size.

PortfolioHeat = Σ OpenRisk / Equity

This explains what portfolio heat measures. It isn't investment advice — see the disclaimer.