Whipsaw Definition

A whipsaw is a rapid price movement in one direction followed quickly by a sharp reversal, often triggering losses for trend-following traders.

What is a Whipsaw?

Whipsaws commonly occur in choppy, range-bound, or highly volatile market conditions.

They can result in multiple false signals for traders relying on breakout or trend-following strategies.

A stock breaking above resistance only to immediately reverse and fall back below it is an example of a whipsaw move.

A wedge pattern is a chart formation where price consolidates between two converging trend lines, signaling a potential breakout.

A weighted average assigns different levels of importance to individual values based on a specific factor, such as size or volume.

Working capital is the difference between a company's current assets and current liabilities, reflecting its short-term financial health.