By Nathan Boardman
The term “big figure” pertains to the stem, or entirety of the dollar value, within a price quotation. The term “big fig” is commonly employed within international currency markets. In the United States, “handle” is frequently used to denote a significant numerical value.
In fast-paced markets, such as the interbank currency, traders often omit significant figures when posting quotations. It is presumed that the complete numerical value is widely recognized and thus prevents the necessity for explicit specification.
Important points:
- Currency traders are commonly required to know about the significant figure, or rounded numerical value, associated with a currency they engage in trading activities with.
- The significant number is mentioned solely in instances where the considerable number is exhibiting rapid movement or approaching a novel threshold, necessitating elucidation.
- Typically, retail investors are presented with the complete numerical value rather than a shortened version.
Gaining an Understanding of the Big Figure
For instance, let’s consider the scenario where the Japanese yen is being traded against the U.S. dollar in the interbank spot market at a bid price of 95.50 and an offered price of 95.55. The prominent numerical value in this context is 95. However, the price quoted by interbank traders is 50 / 55. All participants in the spot market know the current big-figure level of the yen, which experiences fluctuations between approximately 90 to 110 yen per dollar.
While excluding the prominent number is widely acknowledged in interbank and institutional markets, it is rarely practiced when interacting with individual retail investors.
In the interbank markets, traders might require further elucidation regarding the significant numerical value in cases where the exchange rate is experiencing rapid fluctuations. It is possible for such occurrences to take place, such as when a central bank engages in currency interventions.
The significant value can also be elucidated when the currency conversion rate nears whole numbers, like 86.00 yen or 1.3500 euros about the United States dollar.
How the Trades of Big Figures Operate
Large-scale transactions are executed to exploit the constraints faced by individual investors. By implementing a practical approach, engaging in trades against individual retail forex investors can yield considerable profitability.
The market frequently trades at different points, which may be attributed to a Fibonacci level or a trendline.
However, it may also represent a significant level in the Forex market on certain occasions.
Forex traders frequently observe one-sided movements. There exist distinct intra-day fluctuations in prices. When a price reaches a critical level, it is commonly perceived by traders that further upward movement is unlikely. Consequently, traders tend to initiate short positions near said necessary level.
The outcome of this approach often leads to emotional distress for either party involved and should not be taken lightly.
A Plan for Making a Big Figure Trade
One practical approach to executing a substantial forex trade is to discern markets that exhibit consistent unidirectional movement alongside periods of relative stability. The identification of discernible patterns aids traders in identifying potential targets.
Additional instructions:
- It is recommended to establish a strategic approach to order placement that enables one to capitalize on rapid price fluctuations, commonly referred to as pips.
- Implement strategic selling techniques at multiple intervals to generate modest gains of one, five, or ten pips.
- It is advisable to refrain from exceeding a 15-minute duration when awaiting the execution of a trade. Consider withdrawing from the current situation to mitigate potential further losses.
This particular form of trade demonstrates a high degree of efficacy and consequently entails a diminished level of risk. In an unfavorable outcome, the losses incurred are effectively managed.
