Bid Whacker

Someone who sells a stock at or below its bid price. The goal of the maneuver is to drive down bid prices.

Generally, as a seller, you are trying to get prices as high as possible. Therefore, under normal circumstances, bid whacking is considered something of a bonkers move...annoying to other sellers, and self-defeating in terms of getting yourself the most value out of the transaction.

Remember, the stereotypical negotiation goes something like this:

"I'll give you $X."

"I won't take any less than $Y."

"Fine, how about we split the difference? I'll give you an amount halfway between $X and $Y."

In a bid-whacking scenario, the negotiation goes something closer to this:

"I'll give you $X"

"Done! Unless I can talk you into paying less than $X..."

It may sound like bid whackers are conspiracy-theory bogey men purposely driving down stock prices for some nefarious purpose. Or, alternatively, that they are just nervous, inept traders who don't know what they are doing. (Or maybe that they are patently insane).

In realty, bid whacking most often comes up in more extreme market conditions, especially where a stock is falling quickly. These situations force sellers to try to get out of their positions with as little damage as possible. The sellers are jumping on bids, taking what they can get, out of fear that the offers will keep getting worse if they wait for the normal bid/ask dance to provide them with a more nominally efficient price.