Reviewed by Aug 27, 2020| Updated on
What is a Handle?
A handle is a part of the price quote for the entire number. For example, if the stock price quote is Rs 56.25, the handle is Rs 56, which removes the decimal portion. The handle in foreign exchange markets applies to the part of the demand pool that exists in both the bid and the currency deal.
For instance, if the EUR/USD currency pair has an offer of 1.4183 and a request of 1.4185, the handle would be 1.41 - the part of the quote that is equivalent to both the bid and the request. A large number is also called a handle.
Breaking Down Handle
Traders sometimes refer only to the handle of a price quote as other market participants are believed to be aware of the quote's core. The minimum price increase is called a pip in the foreign exchange markets.
Since many of the foreign exchange instruments are quoted in four or five decimal places, it is considered easier to refer to the last two places when addressing the offers and demands rather than to include the handle, which the participants tend to know.
Handle and Foreign Exchange Markets
Foreign exchange covers a vast array of transactions: everything from a traveller's currency conversion at an airport kiosk to billions of dollars in international payments from businesses, financial institutions, and governments.
Specific examples include import and export funding, as well as speculative investment strategies with no underlying goods or services at all. With increasing globalisation, the number of foreign exchange transactions has corresponded to a significant increase.
Spot markets and forward markets are highly relevant for the term handle in the vast global foreign exchange market. Spot markets are markets for financial instruments such as commodities and shares that can be exchanged on-the-spot or instantly. Spot markets are based on spot prices or current market prices.