What you will learn
- Percent versus percentage points
- Basis points and price ticks
- Decimals and rounding
- Troy ounces and contract multipliers
Percent versus percentage points
Percent means per hundred: 2% is 0.02, not 2. A change from 3% to 4% is one percentage point and a relative increase of one third. State which calculation you mean before comparing rates or performance.
Basis points and price ticks
One basis point is 0.01 percentage point. A price tick is the minimum quoted increment under a contract's specification and has its own monetary value. Basis points of a rate and ticks of a trading price are different units.
Decimals and rounding
Keep enough precision during intermediate calculations and round the final tradable quantity according to the allowed increment. Rounding position size up can exceed a cash budget. Display rounding should not alter the underlying accounting calculation.
Troy ounces and contract multipliers
Gold prices are often quoted per troy ounce, while an order may represent several ounces per contract or lot. The multiplier converts price movement into cash movement. Read the actual instrument specification; identical-looking symbols can represent different multipliers.
Worked example
A hypothetical contract represents 10 ounces and moves by $0.10 per ounce. The cash movement per contract is 10 × $0.10 = $1. Five contracts move $5 before costs. This is a unit calculation, not a claim about a broker's symbol.
Try it yourself
A hypothetical multiplier is 25 units and the price rises by 0.20 currency units per unit. Calculate the gross change for three contracts and label the units.
Show the worked solution
Each contract changes by 25 × 0.20 = 5 currency units. Three contracts change by 15. The multiplication cancels the per-unit denominator; fees and direction still need to be included in the final trade result.
Apply this to your course project
Produce a checked workbook of ten sizing and P&L cases, including losing trades.
Keep the calculation inputs, assumptions and decisions with your work. Practical exercises are self-reviewed; the scored knowledge checks assess the questions shown, not an independent certification of practical competence.