Bidwacking. This is when a seller chooses to sell his/her position 'at market', instead of 'at ask'.
Depending on the size of the position, the shares will 'hit the bid' and usually have the effect of causing the bid to drop quickly. Buyers suddenly realize that sellers are anxious to sell, and as a result, they drop their "bid" price even further. Buying and selling is all a matter of creating a market perception. most people want a stock that is in high demand, where sellers are reluctant to sell except at a higher price. Similarly, Most buyers will get spooked when many sellers suddenly are willing to drop their price just to get out of the stock.
This playing out of market psychology is easy to watch on the L2s.
On a high volume momentum stock, 'bid wacking' isn't as destructive. But if the stock is a low volume play just getting started, someone dumping a large position 'at market', could drop the bid as much as 30%, depending on the market makers involved.
Sadly, many newbies don't realize that during a high volume run on a popular stock, it's entirely possible to set a price and one's shares sell 'at the ask'. Not only is this possible, but it's preferable!
Not only is selling at "the ask" better for the seller, (assuring him of a higher PPS selling price) selling 'at the ask' is better for the stock's future performance as well.
That may explain why veteran traders will say "friends don't let other friends bidwack!"
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If you take anything I say as advice, you're crazier than I am.
