Handle
Understanding the Trading Term: 'Handle'
When it comes to trading, you may come across a wide range of terms and jargon that might seem confusing at first. One such term is the "handle". When we plunge into the world of trading, understanding the term 'handle' becomes vital.
What is a 'Handle'?
In simple words, the term 'handle' in the context of trading refers to the whole number part of a price quote. This terminology is commonly used in foreign exchange (forex) markets and futures trading. For instance, if you come across a price quote offered at 1.8000, the handle here would be 1.
Why is 'Handle' Important in Trading?
Handle plays a crucial role in trading as it helps traders to quickly communicate and understand price points. It removes the need to mention the decimal or fractional part, hence, simplifies the pricing information. For traders who work with significant volumes, recognizing the handle speeds up decisions and clarifies communication in fast paced markets.
The Role of 'Handle' in Different Markets
In markets like forex, where prices are quoted with four decimal places, the handle represents the part of the price before the decimal point. On the other hand, in the futures market, the handle can sometimes refer to the price ticks. In these markets, price changes are commonly referred to as 'handles' instead of 'points' or 'pips'.
Example of 'Handle' in Trading
To better grasp the concept of 'handle', let’s take an example. If the EUR/USD currency pair is trading at 1.1850 and traders expect it to reach 1.1900, they might say they are looking for a '50 point move in the handle'. This means they anticipate a change from one handle (1.18) to the next (1.19).
Final Thoughts
Understanding trading jargon like 'handle' is key to navigate the complex world of trading. Although some trading terms may initially seem daunting, gaining clarity on them can significantly improve your trading efficiency and decision-making process. Remember, every bit of knowledge adds a feather to your trading cap!