Penny stocks are prone to price manipulation and scams due to certain factors. Some penny stocks trade for fractions of a cent, allowing promoters to double their money with small price increases. Penny stocks also tend to be thinly traded, resulting in volatile price changes from low volume transactions. Additionally, shady promoters may mislead investors through exaggerated or false information in emails, message boards, and press releases. The document provides tips for avoiding penny stock scams such as ignoring shady promoters, doing research on new promoters, and learning basics before starting to trade penny stocks.

1. Steps To Avoid Penny Stock Scams

2. Penny stock trading is a great way to earn additional income but there are
times it may be hard for one to get the best penny stocks due to number of
different scams. Most of the victims of these activities are investors who are
not aware of what is happening with their penny stocks. Here are some
factors that make penny stocks prone to price-manipulation and scams.

3. Some penny stocks are even
traded for fractions of a cent.
Some promoters try all they
can to ensure that they will
push the shares even if it is
from a tenth of a cent to 2-
tenths. Theoretically, such a
promoter will have doubled his
or her money.
Low prices

4. It is an asset which cannot be
sold easily or exchanged for
cash without change in its
price. Thinly traded securities
are exchanged in low volumes
and mostly they have limited
potential buyers and sellers.
This may lead to volatile
changes in prices once a
transaction occurs.
Thinly traded

5. Shady promoters know that
they cannot trick all investors
through e-mail, comments on
message board and press
releases. Therefore, they may
either stretch the truth or else
flat a lie so as to make penny
stock companies appear
compelling.
Misleading Information

6.  You can avoid penny stock scams by simply avoiding shady promoters. If
they try to call you, politely dismiss the calls and do not reply to their
emails. You may seek advice from your own initiative and just deal with
your financial advisers.
 Do some research about the new promoters. This helps you greatly in
knowing those you can trust and those who you cannot trust.
 Play trade smartly. Know some basics prior starting your trade since you
will know what to expect from those you will be trading with.
How To Avoid Penny Stock Scams

7. In conclusion, the following is what you should check for to ensure that you
will have the best penny stocks.
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