Hey I'm new to trading and whipsaws scare me right now. What indicators can I use to tell the difference between a whipsaw and a real trend forming?
Are you swing trading or day trading? What kind of trend reversal (price and time wise) are you looking for? I like Parabolic SAR and Force Index AND MACD as if they all three line up AND I think the price move is a reversal, that gives me a go signal like MSFT did at the end of today around 120om I saw a huge drop off (which I predicted and then a sharp rise which I bought)
Why do whipsaws scare you, are you trading too big? Another timeframe may be calmer. Do you also go sailing where theres storm? Drawdown is part of trading but not of sailing.
The whipsaws scare me because I don't know how to tell if they're the start of an up or down trend or a whipsaw. So I'm scare I'll miss out on the the rally or correction I've been waiting for. I'm scare I'll mistake a whipsaw for a real trend and get bit, or vice versa. What do you mean by do I go sailing where there's a storm? I'm not familiar with that in terms of trading.
I'm going to start looking at continuation patterns. That should help me decipher between whipsaws, up/down trends, and sideways movements.
Do you really need indicators to tell you when price is whipsawing? I would think your eyes could spot it well before any indicator could alert you. As for patterns, I would be cautious about using anything other than meaningful S&R, and even they have to prove themselves before being taken seriously. Looking for too many different kinds of patterns puts you at risk of sliding down the Rorschach rabbit hole. Also keep in mind that whipsaw can be somewhat contextual and dependent on the size and placement of your protective stops. People with very tight protective stops would likely characterize whipsaw somewhat differently than, say, someone who uses wide, yawning stops.
I guess I'm scared of getting caught in one so I'm thinking, without a magic 8-ball, "How can I predict this is about to whipsaw?". That way I won't have money tied up or get caught on this rollercoaster of in, out, in, out.