Price Movements

Tree Shakes: When a market maker is trying to fill a large institutional buy order, sometimes they may not have enough shares. To fix this, they start to gradually drop the share price in order to give the illusion that the company has a problem. Weak share holders will sell up, and the market maker continues to drop the price until enough weak holders have relinquished their shares. The market maker then fulfill its large order and returns the share price to where it started.
Falling Knife: Normally for reasons such as a profit warning, or a change in market conditions, the future outlook of the company less profitable than originally expected. Hence when a novice investor sees a rapidly falling share price, he or she may see it as an opportunity to buy cheap whereas in reality, the share price may fall further. Traders should therefore avoid catching a falling knife.
Trend is your friend: It is good practice to follow the trend of a share price by studying the moving average. An arithmetic or simple moving average (SMA) plotted on a chart shows the mean average of the share price over the period it is measured. It provides for a good indicator of the general trend of a share price. Sometimes there may be a share price moving upwards hinting people to buy, but if the SMA is in a downtrend this can be a sign that reversal could take place.

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