Why did LTCM have difficulty raising its level of risk?

What will be an ideal response?

One reason LTCM had difficulty raising its level of risk was because it was engaged mainly in spread trades, which are inherently less risky than outright positions. The fund's size also worked against increasing the level of risk. LTCM's positions were so large that, when it bought or sold securities, market prices moved and eroded potential profits. As a result, LTCM took on smaller positions than it wanted because it could not be sure that positions could be liquidated at profitable rates.