Basically it involves large block traders. A stock that is under $2 only needs to move a dime or so to get a 5-12% return. Many MM's and other large block traders will play this lower priced stocks each day on a scalp basis.
For example, if I were to buy 20k shares of IMNY @ 1.00 while the volume is good and daytraders seem to be jumping on board. The stock then rockets to 1.13 in no time. I will take my 13 cent profit X 20k shares=over 2k made for a quick scalp on an intraday basis.(I think my math was close there.)
Scalping by daytraders is what causes many low priced stocks to get those long shadows on candles pointing up only to close much lower by the eod. or the next day. Time can help manage this, however, if you find a good low priced stock that has the earnings and business to backup a steady uptrend. Case in point SOHU, NTES and some of the other overpriced asians were all under $3 before the Gulf War this last year.
Hope that helps!
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