Yes, that's a great idea. Couple of things to consider about 'heat' or risk. When we add up the risk of a portfolio, we loop over each instrument and compute the price difference between the close and the current stop price. So be sure your system has stops, and places those stops into the market every day.
The first thing you might do is block new orders if the risk /equity percent is above some threshold, say 25%. In this case no new orders will be placed but that does not stop the risk from going up or down, above or below your threshold. Each day as the market moves, and the stops are adjusted, the risk is recalculated.
Another consideration is placing many stop or limit entry orders on the same day. You don't know if they will be filled, so when placing the orders you can't keep under a minimum risk threshold. So when the current risk / equity is less than a certain threshold, decisions need to be made about new orders. When using market on open orders this is an easy problem, in that you can compute the risk for each order knowing it will be filled, and rank the orders by strength or other criteria only placing the 'best' orders and keeping under the risk threshold. The attached block has a 'Process Fills' option which is nice for back testing -- checking the risk as each order is filled, but needs to be done manually in live trading.
At the end of a day, you could take a look at your risk and decide it's too high, over a threshold percent of risk / equity. In this case you could reduce your stops to make the risk of each instrument less, or you could reduce the position size of each position.
Many of these implementation decisions will depend on your system design, how the stops are computed, how the orders size is computed (fixed fractional), types of orders, and desired behavior. Even if you adjust the risk one day, the next day will be different and the risk will be higher or lower -- so the risk will never be capped at a particular level or a flat line.
For starters, attached is a Portfolio Risk Manager block that deals with a number of the above issues.
Max Risk Set to 30%: