Understanding the forex trading term "whipsaw"

[fxindicators101]

Hi,

I was looking for a forex trading word "whipsaw", widely used in forex markets. Kindly share with what this term is exactly and how can i use it?

Thanks!

 

[Paulo30]

It usually refers to up/down movements in a pair that throw out traders trying to take a steady trend trading approach.
It's also the reason why indicators don't always work-- ie. the RSI or MACD is showing a great time to buy/sell, so you enter, only to be stopped out when the market reverses in the other direction (resembling the blades on a whipsaw).

I would post a chart/graph, but don't have time right now. It is more of an issue in short term trading (ie. 5mins to 4 hours) as pairs get thrown around due to "noise".

Anyone who trades a purely mechanical system (or attempts to trade using a combination of indicators) will come across this.. you're know it when you see it, or rather when you're "perfect setups" get thrown out.

Hi,

I was looking for a forex trading word "whipsaw", widely used in forex markets. Kindly share with what this term is exactly and how can i use it?

Thanks!

 

[ginar]

Hi,

I was looking for a forex trading word "whipsaw", widely used in forex markets. Kindly share with what this term is exactly and how can i use it?

Thanks!

as i understand it a whipsaw is a sharp move in both bearish and bullish directions that runs the stops of both biases , when your stop has been run you are considered whipped .............

 

[TulipFX]

Hi,

I was looking for a forex trading word "whipsaw", widely used in forex markets. Kindly share with what this term is exactly and how can i use it?

Thanks!

A heavy correction against the trend which takes out your stop loss then immediately continues on its way.

Or dramatic movement around news time when the market can't decide which way to move.

'I got whipsawed' for when the trade direction itself wasn't bad, but the stop was too close and got hit by the whipsaw.

 

[Dracuu]

Here an example of whipsaw. Moving within a sideways range just enough to take out previous tops and bottoms where the casual investor usually place their stops and entries. Its a trend followers nightmare.