A portfolio heat calculator adds up the risk percentage across all your currently open positions, giving you a single figure for your total combined exposure if every stop-loss were hit at once.
Enter the risk percentage for each open position, plus your maximum acceptable heat limit, and the calculator shows your total portfolio heat and whether it's within your self-set limit.
This calculator is for educational purposes only. Results are estimates and may vary depending on market conditions, spreads, commissions, platform settings, and exchange rates. It should not be considered financial advice.
Portfolio heat is the total percentage of your account you'd lose if every currently open position hit its stop-loss simultaneously, calculated by simply adding up the risk percentage of each individual open position. It's a quick, simple way to gauge your total combined exposure across all open trades at once, rather than only looking at each position's risk in isolation.
There's no single universal number, but many risk-conscious traders cap total portfolio heat somewhere between 6% and 10%, meaning even a genuinely bad simultaneous outcome across all open positions wouldn't meaningfully threaten the account. More conservative traders sometimes cap it lower, especially when positions are correlated and could plausibly all move against them at once.
The Portfolio Risk Calculator specifically accounts for correlation between positions, recognising that correlated positions don't simply add their risk linearly since they tend to move together. This Portfolio Heat Calculator is a simpler, more conservative method, straight addition of each position's risk percentage, useful as a quick sanity check even without correlation data on hand.
No, this simple version treats each position's risk independently and just sums them, which is intentionally the more conservative (higher) estimate since it doesn't assume any diversification benefit from uncorrelated positions. If your positions are genuinely uncorrelated, your true combined risk may be somewhat lower than the simple heat total suggests, but treating the simple sum as your working limit is a safer default assumption.
Not necessarily automatically, exceeding your self-set heat limit is a signal to review your open positions and consciously decide whether to reduce size on one or more of them, tighten a stop, or accept the elevated risk deliberately for a specific reason. The point of tracking heat is making this an intentional decision rather than an unnoticed accumulation of risk.
Any time you're considering opening a new position while other trades are already open is the most important moment, since that's when heat can silently accumulate beyond your intended limit. Many traders also do a quick heat check at the start and end of each trading session as a standing habit.
Many risk management frameworks suggest keeping total combined risk across all open positions under 6-10% of account equity at any one time, though the right figure depends on your overall risk tolerance and strategy.
This calculator sums individual position risk, for a fuller picture accounting for how correlated positions can compound your true combined exposure, consider using it alongside our dedicated Correlation Calculator.
Multiple small positions opened simultaneously can still combine into a genuinely significant total risk exposure, portfolio heat specifically captures this combined figure that per-trade risk sizing alone doesn't reveal.
Rather than reactively closing positions once heat is already elevated, it's generally more effective to check projected heat before opening each new position, avoiding the situation in the first place.
Yes, unrealised gains or losses on open positions affect your current equity, which in turn affects the percentage-based heat calculation, worth monitoring as positions develop, not just at the moment you open them.