While many stock charts seem clear and concise, stock market price movement charts have patterns that can be fairly complex if one doesn’t understand the jargon associated with each pattern and the price movements that the charts depict.

There are two main types of analysis used when either following or trying to forecast stock market prices. Technical analysis is a security analysis format used for forecasting the future trend of stock prices through the study of past market data, notably price and volume. Fundamental analysis relies on researching the financial position of the company whose stock prices you wish to chart, whether it’s through that company’s SEC filings, P&L or net debt.

Understanding stock market price charts means that one has to understand price movements as well.

A Tree Shake is where a market maker is trying to fill a large buy order and they don’t have enough shares so they slowly lower the share price in order to scare people into thinking the company has a problem. The tree will continue to shake until enough shareholders have sold their shares allowing the market maker to fill it’s order and return the share price to its prior standing. If your shares in a company start to fall, it’s important to check two things. First make sure it’s not ex-dividend day because your shares will always drop by the same amount as the dividend and two, research the news thoroughly to see if there’s a plausible reason for the stock price to be dropping. If there is no valid reason for the stock to be dropping, you might be witnessing a tree shake.

The Falling Knife is another price movement pattern that gets inexperienced investors to make unwise decisions. Many novice investors see a share drop in value and think it’s a great time to buy stock cheaply. When a beginning investors jumps on a rapidly falling share price, he’s catching the falling knife by not realizing that stocks can continue to fall until they are worth nothing.

The Trend is Your Friend is a popular expression in the stock world meaning that it’s always smart to follow the trend of a share price by investigating the moving average. A simple moving average or SMA is plotted on a chart and shows the mean average of a share price over the period it is measured.

Almost all stock market charts tell a story if you know how to read them properly and are invaluable for anyone interested in making money on the stock market .