Ranking up down non stop

hey guys, anybody know why my ranking keep going up and down? i have KW currently in number 1 but 2 days later it will drop to number 2, another two days it will go up again to number 1. how do i tackle this situation? is it just google update or dance? or is it because my competitor is too strong that i need to build links to strengthen so that i will stay at the top?

hope you guys can contribute to this thread. with tips and your SEO knowledge.