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Trading floor · 5/8Fermi Estimation
Desk · 90% interval Hit 0/0 · score 0
Calibration (target 9 in 10):
Scientific notation works: 3e5 = 300,000. Shorthands like 25m or 8bn work too.
Briefing · Trading floor

Fermi Estimation

Skill: decomposition, calibrated intervalsFirm echo: most prop firms

Give a range you are 90% sure contains the true answer. You score for being right and for being narrow. Over many questions, about 9 in 10 should land inside. If 5 in 10 land, you are overconfident, which in trading means quoting too tight.

  • Break the quantity into factors you can guess (people × rate × time).
  • Estimate in powers of ten; multiply exponents.
  • Set the range by your uncertainty in each factor, then check: would you bet 9-to-1 on it?
Shorthand
  • Seconds in a year ≈ π × 10⁷. Days in a lifetime ≈ 30,000.
  • Range width = log₁₀(high/low). One order of magnitude is a fair default.
  • Hit rate below 90% → widen next time. Calibration beats precision.
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