Fakeout
A term used in technical analysis that refers to a situation in which a trader enters into a position in anticipation of a future transaction signal or price movement, but the signal or movement never develops and the asset moves in the opposite direction.
Investopedia Commentary
The possibility for fakeouts is the reason why traders should use more than one indicator to make decisions. To reduce the probability of getting faked out, experienced traders will require four or more signals to confirm a decision.
Related Links
Trading The MACD Divergence
Introduction To Technical Analysis
Trading Psychology And Technical Indicators
See also: Bear Trap, Bull Trap, Indicator, Reversal, Stop Order, Technical Analysis
Also spelled: fake out, fake-out, fakeouts, fake-outs
