What’s a handle?
A handle is the integer part of a price quote, which means it is the part of the quote before the decimal point. If the stock price quote is $56.25, the handle is $56, removing the cent value in the quote. Traders commonly use handles in futures and equities markets, referring to them as the “big figure” or “big fig.”
In forex markets, the handle refers to the price quote that appears in both the bid and the offer for the currency. If the EUR/USD currency pair has a bid of 1.4183 and an ask of 1.4185, the handle would be 1.41—the part of the quote that equals both the bid and the ask.
Explanation of Handle
Traders commonly use only the handle of a price quote, assuming that other market participants know the stem of the quote. If the S&P 500 futures stand at $2885.43, you can express the handle as 2885 or 85.
If the price reaches $2875.90, a trader may say that the index has dropped ten handles.
In forex markets, a pip is the slightest price movement. When discussing bids and asks, focusing on the last two digits is more convenient because foreign exchange instruments are often quoted in four or five decimal places. Since those involved typically understand the handle, there is no need to mention it.
Handles and Forex Markets
Foreign exchange includes various transactions, such as currency conversions for travelers at airport kiosks and large international payments made by corporations, financial institutions, and governments. Examples include financing imports and exports and speculative investment positions without underlying goods or services. Globalization has led to a notable increase in foreign exchange transactions.
Spot and forward markets are essential for the long-term management of the vast global foreign exchange market. Spot markets are immediate trading markets for financial instruments like commodities and securities, and spot markets depend on current market prices. This contrasts with the futures market, which deals with prices at a later date. Market participants must understand the price quotes’ handle and stem in both cases.
Spot markets can be organized exchanges or over-the-counter (OTC) markets. The standard settlement date for the spot exchange rate is typically two business days after the transaction date. There are exceptions, such as transactions for crude oil. In this scenario, goods are sold at spot prices, but the physical delivery occurs at a later date.
Conclusion
- Handles are the left part of a price quote before the decimal point in the full quote.
- The handle, also known as the significant number, quickly indicates the general price level of a security or index.
- In forex markets, the handle includes the dollar amount and the digits to the right of the decimal point on both sides of a two-way quote.
