Why are low priced shares are more volatile and rise faster than high priced shares ?

Question

Why are low priced shares are more volatile and rise faster than high priced shares ?

Answer 1

I have never heard of such a correlation.

Answer 2

You are right. One major reason is, day traders will buy bulk shares because its low price and number of shares they will get. this will make the volatility.

does this make sense

Answer 3

With a lower share price a trader can buy more shares for the same total dollar investment.  That means the per share trading cost is less.  Which means a small share price increase can yield a profit.  Many traders who are working on short time frames like that.  They buy, the stock goes up a few pennies, they sell for a profit. Then do it again.  

This type of trading goes on all of time.  The person trading this way rarely cares about the company's fundamentals.  

This produces a lot of volatility.  But it isn't always up.  These stocks usually come down just as fast.  Because the same process is used to short stocks.

Answer 4

Ususally a higher priced share has more research available, bigger shareholder list (usually institutional holders) therefore the price doen't fluctuate wildly on short term traders.

A small stock has little research therefore lots of speculation from short term traders, lots of fear and greed.etc.etc.