Whipsaw

A situation in which a security's price moves sharply in one direction and then quickly reverses, often triggering stop losses on both sides of the market in rapid succession. Whipsaws are particularly common in choppy, range-bound, or low-liquidity markets and around major news releases where initial reactions are often reversed. Traders guard against whipsaws by using wider stop losses, waiting for confirmation before entering trades, or avoiding trading during high-uncertainty events.