Heat is the sum of open risk-per-trade across all positions, adjusted for correlation. Many traders cap it at 5% to 8% of the account. It stops the situation where six reasonable 1% trades become a 6% loss on one bad headline.
Reducing heat means smaller positions, fewer positions, or moving stops to breakeven on winners.
Example: four open trades risking $250, $300, $200, and $250. Heat is $1,000, or 4% of a $25,000 account. If three are long tech stocks, the true heat is closer to the single-sector move.
Related: risk-per-trade, correlation, risk-management, diversification