How Alexa works?

One of my competitor site has been online for about 3 years or so now. They are definitely well known and whenever you go to their site, almost all the time they have 350 online users at any one time. Their alexa ranking is 110k. It has been that way since 2 months ago.
My site has been up almost a year now. We are not as well know as they are and we dont have more than 50 users only at any time. About 2 months ago my site was around 110k on the alexa ranking. Now it is around 50k.

So here is what I am confused. How is it that a more traffic oriented site isnt doing well on alexa? Unless my competition site is actually showing fake online stats?

 

Alexa collect data from the users Alexa browser Bar.

 

I dont use Alexa browser bar and neither the other site.

 

I am Not sure if Alexa Gives correct information

I use the Google Analytics mostly.

 

alexa is always used traffic view.

 

if a user installed alexa tool bar, when the user visit a website, alexa tool bar collect and send data of visit behavior to alexa for analysis.

 

i use seoQuake addon on Firefox that works great for me

 

Alexa ranking can be faked but that forum has more than 350 users online most of the time

 

Most people cheat alexa more easily , simply by showing fake traffic by using fake clicks.
So do not consider alexa for much

 

From Wikipedia:

 

alexa can be fake, don't care alexa much

 

Ratings are based on a level from 1 to 4,000,000 and it goes beyond 4 mil sometimes. The LOWER your rating on Alexa the better. 4,000,000 is for new sites mostly, or sites with no traffic basically. You have to give it 3 months to give you an accurate rating. 1 is the site with the most traffic. A darn helluva lot of it at that.

 

Even according me alexa ranking is nor proper because alexa used their own database for ranking.