What is Handle?
The term "handle" might initially seem obscure in trading, but it's a simple concept with significant implications. Essentially, a handle is the whole number portion of a price, excluding decimals or fractions. Understanding how handles influence price movement is crucial for traders seeking a clear perspective on market dynamics and key price levels.
How Handle Works
A handle in trading is simply the whole number part of a price, ignoring decimals or fractions. While it might seem insignificant, understanding handles is crucial for traders. These round numbers often act as psychological levels where buying or selling pressure can intensify. Additionally, historical price levels tied to specific handles can function as support or resistance points. These factors, combined with the role of handles in chart patterns and identifying order blocks, make them a valuable tool for traders to analyze market dynamics, recognize potential trading opportunities, and make informed decisions.
Handles and Foreign Exchange Market
Unlike other markets where a handle refers to the whole number portion of a price, in forex, a handle represents the initial digits of a currency pair quote. For example, in the EUR/USD pair, if the bid price is 1.1234 and the ask price is 1.1236, the handle is 1.12.
While not as prominent as in other markets, handles can still be relevant in forex trading. Traders often refer to specific handle levels when discussing market movements or potential trading opportunities. For instance, breaking a significant handle level like 1.20 in EUR/USD might signal a potential trend reversal. However, the focus in forex is generally on the smaller decimal points, as these represent more immediate price fluctuations and trading opportunities.