Whipsaw – What is a Whipsaw?

What is a Whipsaw?

Definition of Whipsaw: It is a slang term for explaining a high volatile market condition in which a sharp cost movement is followed by the sharp cost reversal. The expression is generally used in the perspective of a dealer being the “whipsawed” by market that results in the loss because of the inability to respond to adverse the changes in the market. The invention of this term is related with the concept that the lumberjacks will most often utilize the logs and the cutting involves quickly to and fro movements. Whipsaw pattern can take place in two different ways. In the initial method, a trader thinks about a starting position and is greeted by the upward movement in cost, followed by the great down movement under the starting entry point. Another way is the overturning the positive profit.