Stock Market Glossary
VaR
Value at Risk – statistical maximum loss estimate with a given probability.
In brief: Value at Risk – statistical maximum loss estimate with a given probability.
Meaning in practice
A 95% VaR of 1,000 euros on one day means: a higher loss can be expected on 5% of the days. VaR is a standard risk measure, but has weaknesses in tail risks (black swans).
Context for investors and traders
The term helps put market information into context. Its relevance depends on the instrument, investment horizon and current market situation, so it should be read with other data and a personal risk framework.
How to use this in practice
Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.
What to keep in mind
Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.
