Whipsaw describes a market forex when price action abruptly reverses its trend, only to resume the trend a shortly after. The move against the prevailing trend can cause false trading signals on technical indicators such as moving averages. When a trader gets "whipsawed" he initiated a trade, betting whipsaw the prevailing trend was ending, only to have it resume soon after.
In the example above, a trader using a trading indicator based on indicator of price action and a indicator average buy when whipsaw goes above moving average, sell when price moves below the moving average indicator have gotten a false signaled and whipsawed on May 24th.
Price crossed below the moving average, initiating a sell signal, only to resume the uptrend started in the previous week.
MACD page 3 - Crossover Signals. Online forex trading whipsaw a high degree of risk to whipsaw capital and it is possible to lose your entire investment. Only speculate with money you can afford to forex. Forex trading may not be suitable for all investors, therefore ensure you fully understand the risks involved, whipsaw seek independent advice if necessary. Forex Services Forex Trading Terms FAQ.
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Find what you're looking for Forex Glossary Find definitions for key Forex trading terms along forex introductions to the concepts, people and entities that impact forex Forex market. A situation where the prices movements suggest a reversal of a trend, only to resume the trend a shortly after.