DEFINITION of 'Whipsaw'

A condition where a security's price heads in one direction, but then is followed quickly by a movement in the opposite direction. The origins of term is derived from the push and pull action used by lumberjacks to cut wood with a type of saw with the same name.


There are two types of whipsaw patterns. The first involves an upward movement in the share price, which is then followed by a drastic downward move, which causes the share's price to fall relative to its original position. The second type involves the share price to drop for a little while, and then suddenly, the price abruptly surges towards positive gains relative to the stock's original position.

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  2. Trend

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  3. Rally

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    A sudden and significant decline in the value of a market. A ...
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    A change in the direction of a price trend. On a price chart, ...
  6. Volatility

    1. A statistical measure of the dispersion of returns for a given ...
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