What is Fermi estimation and why is it used in trading interviews?

Fermi estimation is the art of making reasonable approximations for quantities that are difficult to measure directly. Trading firms like Jane Street use Fermi questions to test candidates' ability to break down complex problems, make reasonable assumptions, and arrive at order-of-magnitude estimates quickly.

How do I set good bid/ask spreads in Market Maker?

Set your low (bid) and high (ask) estimates to create a range you're confident contains the true answer. Tighter spreads earn more points if correct but risk being wrong. Wider spreads are safer but earn less. The key is calibration: being right about your confidence level.

What is calibration in estimation?

Calibration measures how well your confidence matches reality. If you're well-calibrated, 80% of your 80% confidence ranges should contain the true answer. Market Maker tracks your calibration score to help you develop accurate self-assessment of your estimation abilities.

How do I practice Fermi estimation for Jane Street interviews?

Start by practicing order-of-magnitude thinking: estimate in powers of 10. Break complex questions into smaller, estimable parts. Practice with Market Maker's diverse question set covering population, geography, economics, and more. Focus on your reasoning process, not just getting the exact answer.

What makes a good Fermi estimator?

Good Fermi estimators have broad general knowledge, can decompose problems into tractable sub-problems, make reasonable assumptions, and accurately assess their own uncertainty. Market Maker develops all these skills through repeated practice with immediate feedback.