When I first saw the link for this week’s buzzword, I thought we were back in the time of CB radios, when everyone had a “handle.” According to our friends at Investopedia, however, the term has a different use in the financial markets. There a handle is “The whole number part of a price quote. In a quote the handle could be $56, while the price quote for stock might be $56.25. The quote’s handle eliminates the part of the price quote that is a decimal. In foreign exchange markets, the handle refers to the part of the price quote that appears in both the bid and the offer for the currency. For example, 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 is equal to both the bid and the ask. This can also be called “the big figure.”
Traders often refer to only the handle of a price quote since it is assumed that other market participants know the stem of the quote. In the foreign exchange markets, the minimum price movement is called a “pip.” Since many of the foreign exchange instruments are quoted out four or five decimal places, it is considered simpler to refer to the last two places when discussing the bids and asks, rather than include the handle, which tends to be known by the participants.