# VAR Interpretation

I am trying to understand the concept of VAR and its interpretation.

It says that there are two interpretations:

5% VAR of \$12,500 daily

1. There is a 95% chance you will not lose more than \$12,500

2. There is a 5% chance you will lose at least \$12,500

I find these two statements contradicting each other. Not sure how to interpret them.

Can someone help me?

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There is a 95% chance that I will make money or that losses will be between \$0 and \$12,500.  The other 5% are my “Holy crap!!!” scenarios.

“Mmmmmm, something…” - H. Simpson

the two sentences i wrote are still not clear with the explanation you gave me :(

Let’s say this is the graph of my profits.  My “Holy crap!!!” scenarios are in the blue section (5%) while the grey part is what I expect to happen 95% of the time.

“Mmmmmm, something…” - H. Simpson