$1000 invested in a stock today that rises to $1100 tomorrow has more capital at risk in that stock at that time. Part of the AIM process is to reduce that rising risk (sell-to-reduce-risk-exposure trades).
Of course, this is a major functions of the AIM-method, but one can also state as a prime function that if the stock gets into a rising trend then invest more capital. . in order to step out when enough profit is made, one makes more profit with a larger capital base. With the same logic one can set priorities on limiting loses as the price drops, then bailing out at a predetermined loss makes sense too and stepping in again as the prise recovers from a dip is also what AIMers do.
So both type of investors do not know in advance what the price is going to do: Both have the same market information available. All they can do is to select the type of investing they want to do and try to answer the question as what amount of stock they want to start with and how much reserve they want to hold on to. Both investors have against them that they do not know what the prices are going to do and so have the dilemma they can not decide what the optimum equity/reserve ration should be without having good understanding of the market trend.
It is irrelevant that investing more capital after a price had risen creates more capital at risk. After a risen price the profit is larger too because of the extra invested capital. . . the investor can bail out at any level of profit that is enough for him. If he waits too long and the price drops again that is simply part of his game. . .for as far he is not a part of an ignorant herd that knows nothing about the market dynamics. If they know their business they might bail out with a large profit while an AIMer has liquidated too early in the view of the investor that sits on the large profit stack
That is my take on the point of view that all investors have no solid information for deciding what the optimum Cash/Equity Ratio should be when they start their investment.. .it is not only a problem for AIMers.
AIMers have a similar problem: If they keep buying worthless shares on a deep diving market then they lose their shirt
