What Is a Handle?

What Is a Handle?

Let me explain what a handle is in trading: it's the whole number part of a price quote, meaning everything to the left of the decimal point. For instance, if a stock is quoted at $56.25, you can think of the handle as $56, ignoring the cents.

Now, in foreign exchange markets, the handle takes on a slightly different meaning—it's the part of the price quote that shows up in both the bid and the offer for a currency pair. Take EUR/USD with a bid of 1.4183 and an ask of 1.4185; here, the handle is 1.41, as that's the common segment in both.

Key Takeaways

You should know that a handle is simply the left side of the decimal in a full price quote, used to quickly indicate the general price level for a security or index, where traders might talk about how many handles a price has shifted.

The part after the decimal, whether fractional or decimal, is what we call the dollar price or the 'stem.' In forex specifically, the handle covers the dollar amount plus any digits to the right that match in both bid and ask of a two-way quote.

How Handles Work

Handles come into play often in futures and equities markets, where they're also known as the big figure or 'big fig.' Traders frequently just mention the handle because it's assumed everyone knows the stem. For example, if S&P 500 futures are at $2885.43, you might hear it referred to as the 2885 handle or just the 85 handle. If it falls to $2875.90, someone could say it dropped ten handles.

In forex, the smallest price move is a pip, and since quotes go to four or five decimal places, it's easier to focus on the last two digits for bids and asks, skipping the handle that participants already know.

Handles and Foreign Exchange Markets

Foreign exchange covers a huge variety of transactions, from a traveler converting cash at an airport to massive payments by corporations, institutions, and governments—think financing imports, exports, or speculative positions without actual goods involved. With globalization, these transactions have surged.

In this vast market, terms like handle are common in spot and forward markets. Spot markets deal with immediate trades at current prices, unlike forwards which set prices for later. In both, you need to grasp the handle and stem of quotes. Spot markets can be exchanges or over-the-counter, with standard settlement two business days after the trade, though exceptions like crude oil involve spot prices but delayed delivery.

What Are Other Names for the Handle in Trading?

When you're trading futures or equities, the handle is the whole dollar part of the price to the left of the decimal—also called the whole dollar value, big figure, or big fig.

When Is the Handle Used?

Traders quote the handle, or big figure, mainly when prices are moving fast or hitting new levels, to keep things simple and clear. As a retail investor, you'll typically see the full price, not just the handle.

Are Handles and Pips the Same Thing?

No, a handle and a pip are not the same in forex trading. The handle is the matching part in bid and ask quotes, while a pip is the tiniest price change, usually 0.0001 at the fourth decimal. Pip stands for percentage in points, and spreads are measured in pips.

The Bottom Line

To wrap this up, a handle is a trading term used in futures or equities for the part of a quote left of the decimal, like 28 in $28.65, with the decimal called the stem. Traders use it to simplify talk about price levels and changes, such as a gain of 10 handles from $28.65 to $38.24. In forex, it's the shared part across bid and ask, possibly including some fractional digits.