A volatile market condition where an asset’s price rapidly moves in one direction and then quickly reverses to move in the opposite direction. This sharp and sudden change in direction can “whipsaw” traders, especially those using trend-following strategies, causing them to incur losses as they buy at high prices and sell at low prices, or vice versa.
Whipsaws are particularly challenging for traders because they can generate false trading signals, leading to mistaken entries or exits.
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