If you are taking high risks, it is important to decide before hand when you are going to say quit. Most people take high risk without knowing it, lured by only the potentially high reward. Such actions usually end up in disasters. If you want to climb mount Everest, you should be properly equipped to do so. By contrast, low risk can be expected to generate low returns.
Low risk means potential for loss is low.
Therefore before investing your hard earned money or while planning to build long-term capital, one must closely examine the risk profile of any investment proposal. Examine your liquidity needs for future in different time frames, and then invest. Low risk investments are usually more liquid compared to high-risk investments. Risk profile of different products may change over a period of time as market conditions change. For example, as markets rise rapidly, risk increases.