In the financial markets, whipsaw refers to a situation where the price of an asset moves sharply in one direction, only to reverse course and move in the opposite direction, often leaving traders with losses. It can be a frustrating and costly experience, but there are a few things traders can do to avoid whipsaws.
One of the most important things to remember is that whipsaws are a normal part of trading. They can happen in any market, and there is no way to completely avoid them. However, by understanding the factors that can contribute to whipsaws, traders can take steps to reduce their risk of being caught in one.
