On this Wikipedia page about value at risk, at the end of the second paragraph, it says "This assumes mark-to-market pricing, and no trading in the portfolio."

What exactly does "trading in the portfolio" mean here? I tried to google it, but no seemingly relevant result was yielded.


Take a look at a longer quote about Value at Risk (VAR):

For a given portfolio, time horizon, and probability p, the p VaR can be defined informally as the maximum possible loss during that time after excluding all worse outcomes whose combined probability is at most p. This assumes mark-to-market pricing, and no trading in the portfolio.

For example, if a portfolio of stocks has a one-day 5% VaR of $1 million, that means that there is a 0.05 probability that the portfolio will fall in value by more than $1 million over a one-day period if there is no trading. Informally, a loss of $1 million or more on this portfolio is expected on 1 day out of 20 days (because of 5% probability).

That measure only applies if you don't make any changes to the portfolio during the time period. If you make any changes to the portfolio by buying or selling anything then the calculated VAR will be invalidated.

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