Risk as experienced

The gap between plan and behaviour.

Tolerance is discovered

People overestimate how much volatility they can hold until they watch a third of their money disappear. The tolerance that matters is the one you display in a crash.

Selling at the bottom converts a paper fall into a permanent loss.
Writing a plan in advance is the practical defence.

Loss aversion

Losses feel roughly twice as bad as equivalent gains feel good, which pushes people towards decisions that lower expected returns without lowering real risk.