Position limits come in three flavours. Self-imposed limits cap how many trades you can have on, which controls attention as much as risk - most people manage four positions well and twelve badly. Broker limits restrict size in thin or volatile products. Exchange limits, in futures and options, cap speculative positions in a contract outright.
The self-imposed version is the most useful and the most ignored. A cap of five open positions forces ranking: to take a sixth idea, something must be closed, which is a healthy comparison you would not otherwise make.
Pair the count limit with a risk limit. Five positions at one unit each is a different book from five positions at three units each, and only the second one can hurt you badly.
Related: single-name-limit, max-open-risk, unit-sizing