Whipsaw
a.k.a. Whipsawed, Chop
When price jerks sharply one way, then sharply the other, stopping out traders on both sides.
In plain English
When price jerks sharply one way, then sharply the other, stopping out traders on both sides.
A whipsaw is the market cracking a whip. Price breaks out, you jump in, it snaps back and hits your stop. You flip the other way, and it snaps back again. Named after a two-person saw that moves back and forth, it is one of the most frustrating experiences in trading.
Whipsaws are common around news releases, in thin markets and in sideways markets where breakouts keep failing. Waiting for confirmation, or simply trading less in choppy conditions, helps.
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