what is meant by risk tolerance 
risk tolerance refers to the amount of risk an individual is willing to take when trading or investing an individual with a high risk tolerance is comfortable taking higher risks they will invest in assets or strategies that come with a high risk of loss but also a higher risk of return individuals with a low risk tolerance are the opposite they do not want to risk losing money and therefore choose investments that are low risk in general younger people have a higher risk tolerance as they have their entire life to earn money or recuperate from losses older individuals such as those in retirement do not have a high risk tolerance as they are focused on preserving their money 