Big Figure: An Overview
The term big figure refers to the stem, or whole dollar value, of a price quote. It is most often used in international currency markets, where it is often abbreviated as "big fig." In the U.S., big figure is also referred to as the "handle."
The big figure is usually omitted when traders post quotations in fast-paced markets such as the interbank currency market. The assumption is that the full number is common knowledge and does not need to be specified.
- Currency traders are expected to know the big figure, or round sum value, of a currency they are trading.
- The big figure is quoted only when the big figure is moving fast or approaching a new level, requiring clarification.
- Retail investors will normally see the full figure, not an abbreviation of it.
Understanding the Big Figure
As an example, assume that the Japanese yen is trading versus the U.S. dollar in the interbank spot market at 95.50 (bid) / 95.55 (offered). The big figure here is 95, but interbank traders will quote the price as 50 / 55. Any participant in the spot market will know the current big-figure level of the yen, which fluctuates in value between roughly 90 to 110 yen per dollar.
While omitting the big figure is accepted practice in interbank and institutional markets, it is seldom done when dealing with retail investors.
Even in the interbank markets, traders may need clarification on the big figure if the exchange rate is moving very rapidly. That can happen, for instance, during currency interventions by a central bank.
The big figure may also be clarified when the exchange rate approaches round numbers, such as 86.00 yen or 1.3500 euros to the US dollar.
How Big Figure Trades Work
Big figure trades aim to take advantage of retail investors' limits. With the right strategy, trading against retail forex investors can be quite profitable.
The market often trades at levels that are critical at various times, which could be due to a Fibonacci level or a trendline.
But at times, it also could be a Forex big figure level.
Forex traders often see one-sided movements. That is, there are sharp intra-day price movements. As a price reaches a critical level, traders often think that it can’t go higher, so traders start to take short positions near that critical level.
This strategy ends in tears for one party or the other and should not be undertaken lightly.
A Strategy for a Big Figure Trade
The best way to make a big figure forex trade is to identify markets that move in one direction and side. These trends help a trader find targets that are obvious. Other guidelines:
- Set orders in such a way that you can take advantage of a series of quick pips, or price movements.
- Sell intelligently at various stops in order to make one, five, or ten pips.
- Don't wait more than 15 minutes for a trade to work. Bail out before you lose more.
This kind of trade works in most cases and therefore carries less risk. Even if you lose, the losses are controlled.