What you will learn
- Dimensional analysis
- Independent recalculation
- Boundary and zero-value cases
- Explain a rejected position size
Dimensional analysis
Dimensional analysis checks whether the units on both sides of a calculation match. Price per ounce times ounces per contract times contracts should produce currency. A formula that still contains ounces where cash is expected has a missing or inverted conversion.
Independent recalculation
An independent recalculation uses a second method, not a copy of the same formula. Compare a spreadsheet result with a hand calculation and a broker statement where available. Agreement between duplicated formulas cannot reveal a shared mistake.
Boundary and zero-value cases
Boundary cases include zero stop distance, negative quantity, missing multiplier, insufficient funds and a minimum size larger than the calculated maximum. Treat undefined or invalid inputs as errors rather than silently replacing them with plausible-looking defaults.
Explain a rejected position size
A rejected position size is a valid calculation outcome. If the minimum order risks more than the permitted budget, the arithmetic does not authorize increasing the budget. Change the hypothetical instrument, revise the plan on its merits, or stay out.
Worked example
A worksheet divides 50 by a missing stop distance that has been converted to zero. The resulting infinite quantity is not a large opportunity. It indicates invalid input and must block the order-size output until corrected.
Try it yourself
Design three checks for a sizing worksheet: one unit check, one invalid-input check and one minimum-size check. Explain what the user should see when each fails.
Show the worked solution
Check that price distance times multiplier produces cash; reject missing or nonpositive distance; compare the minimum tradable size with the computed maximum. Each failure should show a specific message and no executable quantity rather than a fabricated estimate.
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.