Trading strategies
Whipsaw
Definition
A cross that reverses soon after it fires, so a buy is followed by a sell at a worse price. Common when price moves sideways.
Example
Say the 9 EMA crosses above the 21 EMA with a stock at $30.40, and you buy 100 shares. A few candles later price slips back, the averages cross down, and you sell at $29.90, a $50 loss before costs. In a sideways range this can repeat several times in a row, each cross arriving just after the move it was meant to catch.
Hypothetical numbers, for illustration only.
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