Similar to the phrase "I am just jerking your chain". This phrase is said after you let someone know that what you said previous to the phrase itself was simply in jest, and you were trying to get a rise out of them.
Many confuse this phrase to mean the sexual pleasing of a horse with one's hand. However it refers to the jerking of the reins of the horse.
Sam: Holy shit, Thomas you better get outside someone is towing your car.

Thomas: Oh fuck!

*Thomas runs out, comes back a minute later*

Thomas: What the hell man! My car is fine.

Sam: Relax man I am just jerking your horse, plus I wanted your spot on the couch.
by L K-9 January 21, 2016