There are fundamental changes in many aspects like policies, regulations, and macroeconomic variables affecting the stock market. This part focuses on experts opinion about whipsaw. This is all explained in a book entitled Evaluating the Building Blocks of a Dynamically Adaptive Systematic Trading Strategy. The writers are Sonam Srivastava and Ritabrata Bhattacharyya. Based on their opinion, traders must be adaptive to trading style in order to leverage different phases in the stock markets. Their solution is that investors could choose asset classes in different markets so that there is a stable risk-adjusted return profile. However, some experts have different solutions and advice.
Whipsaw is a sudden opposite direction of price movement which is different from trader’s expectation. Based on many references, it might result in a loss. But other suggestions could lead to the ability to ride out the fluctuations in price. This way traders could maintain both investment and profit realization. Recently there are many cases of whipsaw due to uncertainties. These are like the rise of inflation, geopolitical tensions, future of the economy and many more. In order to survive during whipsaw, experts suggest that investors remain choosing a long-term strategy.
They continued that it could create more strength for the investors although whipsaw occurs. Other experts suggest investing in the more stable sectors like healthcare and avoiding unstable investments like real estate. However, most experts argued that they expect significant volatility in the short term. One expert recommended a defensive position. But all of them agree that long-term portfolios would survive more during a whipsaw.
