Nathaniel D63 Jackson#9

查看翻译

What is value-at-risk (VaR) in trading?

Value-at-risk (VaR) estimates the maximum potential loss of a portfolio over a specific time at a given confidence level. For example, a daily 95% VaR of $1,000 means there’s a 5% chance of losing more than $1,000 in a day. VaR is used by institutions for risk management but can underestimate extreme market events. Traders can apply simplified VaR models to gauge portfolio exposure, though complementing it with stress testing is crucial.