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.