My parents immigrated to the USA with around $2000 total in the 1980's and instilled the importance of saving money and working hard. However, when I was 26 years old, I decided to take a shortcut to boost my net worth and started playing around with highly volatile stocks. I had about $25,000 saved up and no student loans to pay off, so I figured that if I lost it all then I'd have plenty of time to save that money again.
I started looking for stocks that were near or close to their all time lows. For example, a stock with the ticker of SGY went from a high of $2000's to a low of around $17 just a few years later. I wanted to make sure that whatever stock I chose had a minimum market cap of greater than $100 million dollars, so I knew the company was at least somewhat legit. I chose a few more stocks based on that criteria and tracked them for a period of 3-4 weeks each and tracked the support and resistance levels to trade between. Basically, I found that many of these stocks were trading between a 10-15% up or down swing with an occasional spike on a regular basis.
Based on these patterns, I was able to turn my $25,000 investment to over $156,000 in a relatively short time frame. Unfortunately, this is when the greed started kicking in! I thought that I could take that investment and easily double or triple it, so I started tracking stocks that were way more volatile and more in the penny stock range. I was tracking stocks less than $5 and with market caps less than $15 million to play the increased volatility and spikes.
Over the course of the next 4 months, I saw my $156,000 dip to around $12,000 as many of the risky stocks I chose had conducted reverse splits, or ended up being pump and dumps. I quickly realized that many of these small companies are complete scams especially in the bio tech/pharma space. Essentially, they put out "good news" regarding a drug in their pipeline and the stock gets pumped on message boards or apps like stock twits, and there is rarely any real actual results. I did the stupid thing of trying to average down thinking it would go back up. Just as an example, one of the holdings had 2 reverse splits, and then got kicked off Nasdaq for not being able to be above the minimum $1 price. For this particular stock the value is now around $3, but my average is close to $156. Basically, I'll never see my money again.
The valuable lesson I learned:
Always set a goal either in realized gains such as earning $500 a week, or set a percentage you will sell at such as 5% gains. Lock in your profits, because it can easily disappear when playing with volatility, and do your own damn research. Don't base your investment on what random people say on message boards, or reddit. When playing it safe, there will be those stocks that you sold way too early, and you could have gotten double your realized gains, but it could have very easily gone the other way as well.
Good luck!