Meme Manual: Rebirth, I Want to Be a Diamond Hand (Part Three) | Produced by Nan Zhi

Original | Odaily Planet Daily (@OdailyChina)

Author|Nan Zhi(@Assassin_Malvo)

In the previous articles ‘Meme Training Manual: Rebirth of I Want to be a BCD Player (Part One)’ and ‘Meme Training Manual: Rebirth of I Want to be a BCD Player (Part Two)’, the author proposed a ‘trap’ smart Address ‘scoring method’ to find the ‘BCD Player’ among these smart Addresses and follow their actions, to explore whether following BCD Players can be a stable profitable approach.

**Last week, there was a significant drawdown in the copying account. After evaluating it, the author found that using ‘trading frequency’ and ‘overall profit-loss ratio’ as the core evaluation factors was not comprehensive enough and had too large granularity. Therefore, a Depth evaluation method for traps has been proposed. This article will disclose and review it, and further share and discuss the copying system with the readers.

Risk warning: The trap system has been running since October 8th, and has only been operational for 21 days. Although some results have been achieved at present, objectively speaking, the amount of data and control experiments are not sufficient, limited rigor, and are for reference only. In addition, to ensure the objectivity of subsequent tests, this article will not disclose any Address involved in the operation.

Retracement Reflection: Ultimately, Profit and Loss Originate from the Same Source

Pullback Scenario

Last week, there were four accounts running, copy trading account 1 to 4. Among them, accounts 1 and 2 are core accounts, which copied the Address that clearly meets the system requirements. Accounts 3 and 4 adopted some aggressive strategies. During this period, accounts 1 and 2 also experienced significant drawdowns. The fundamental reasons for this can be traced back to:

• High Position, High Frequency Heavy Position Buying: As mentioned in the second article, some Addresses like to buy Tokens with a Market Cap ranging from millions to tens of millions of dollars multiple times, without setting stop losses. However, these Tokens often have a short lifespan of a few hours to a few days and have poor stability and certainty, resulting in a very poor risk-reward ratio for this type of trading. An actual scenario that occurred was when a certain Token reached a Market Cap of 11 million, and the copy trading target made 20 consecutive purchases. Copy trading account number 1 set a purchase amount of 0.8 SOL per transaction, totaling 16 SOL. However, within a few hours, the Token’s value plummeted to a Market Cap of 3 million dollars, causing the largest loss in the account’s history.
• Low position, high frequency, low winning rate buy-in: Some accounts are keen to buy in the Pump inner plate or tens of thousands of Market Cap, and profit once after losing more than ten times. If these addresses adhere to the strategy of not stop loss and long-term profit, they also meet the requirements of “diamond hands”, but due to the low price fluctuation problem, the profit ability of the followers will be significantly lower than that of the followed addresses, and the long-term EV is negative.

Return to the original source and clarify the portrait of the follow-up object?

Therefore, the author reorganized the portrait of the intended copy trading target to guide the evaluation system upgrade. At that time, the thinking logic of the original text is as follows:

What kind of Address are you looking for? Low trading frequency, long holding period, able to enter at the bottom rather than fear of missing out or chasing the market, good risk-reward ratio, not cutting losses, and low drawdown Address.

Which factor is most important to me?

1. Ranked first in low drawdown, we need to find the investment ratio when losing the most, and get a Gold Dog every time we lose continuously for a certain number of times;
2. Secondly, in addition to the total profit and loss, it is also necessary to calculate the details of the cost of investment. I do not want it to be the address of a big bet, and to calculate the proportion of fear of missing out in the high position of losing money.
3. It is not about winning big over small, but also about the ability to enter at the bottom, the proportion of making money through low-level entry in statistics;
4. The trading frequency is not high, and the number of purchases is also not high;
5. If you hold it for a long time, you can also include it in the statistics in point 4 without cutting people off.

Depth Evaluation System

Based on the above portrait requirements, the author has completed the supplement of two Depth evaluation systems, details as follows:

Trade Point Evaluation: Think Big, Anti FOMO

The idea of the system is to target each Address:

• Get a list of the most profitable Token and the Token with the most losses;
• Filter tokens with profits greater than a certain threshold, for example, the author selects tokens with profits greater than $5000 and losses greater than $2000;
• Get the transaction details of the first purchase, second purchase, … until the first sale of this Address on this Token;
• Calculate the average Market Cap of each purchase;
• How many times were purchased before the first sale?
• Statistics on total profit and total cost;
• Calculate the holding period from the first purchase to the first sale.

The statistical results are as shown in the following figure. By using this table, you can obtain:

• The ability to “buy at the bottom” of each Address, for example, the first 7 Addresses can be bought below a market capitalization of one million dollars, and the risk-reward ratio is very high, only taking action once or twice;
• The risk of losing money in the “high fear of missing out” situation, for example, the last Address enters at an average Market Cap of 20 million USD, which is obviously not suitable for copy trading;
• With the ability to achieve big results, according to the profit part - the average profit-loss ratio;
• stop loss style, obtained by the average profit and loss ratio of the loss part, the closer to -1 indicates that this Address does not like stop loss more;
• **The degree of ‘Diamond Hands’ is determined by the average holding period.

Review of Recent Trading Levels

The table obtained in the previous section shows the historical profit and loss TOP situations of this Address, which cannot reflect the recent trading level. On the other hand, the data provided by the data platform is not completely accurate. The author’s statistical path for “recent trading level” is as follows:

• Get the 100 Tokens that a certain Address has traded recently;
• Exclude Tokens not created by pump;
• Exclude Tokens created for more than 30 days;
• Get the total profit and total loss of this Token;
• Statistics the win rate of filtered Tokens.

Reporting of Copy Trading System Data and Settings of Copy Trading System

Although there has been a round of retracement, the stability of the upgraded system has significantly improved. Currently, copy trading 1 and 2 have returned to ATH, while strategies 3 and 4 have failed verification and have been liquidated.

This is a disclosure of the No.3 copy trading object, the Address is “HdxkiXqeN 6 qpK 2 YbG 51 W 23 QSWj 3 Yygc 1 eEk 2 zwmKJExp”, nicknamed “Alien Cat”, which belongs to the “Universally Known” Address. The purpose of No.3 copy trading is to test this type of highly profitable but widely known Address, and the final test result is to lose and exit.

As of 09:00 on October 29th (UTC+8), the data from each wallet is as follows, in SOL:

Copy Trading Settings Details

The Bot used by the author is Dogee, and most of the copytrading Address settings are as follows. The key points are as follows:

• Set the minimum follow-up amount to prevent the poisoning mentioned in the first and second articles;
• Following all purchases should actually be set separately based on the win rate and risk-reward ratio of the internal market;
• When selling in proportion, the ultimate goal and core judgment factors of this system include “buying in one go at a low point and selling in batches at a high point”, so it is necessary to choose to sell in proportion with the object being followed.
• Due to the market cap limit, it is extremely difficult to profit from chasing the market. Multiple Addresses have set a market cap limit of 10 million US dollars for intuitive experience. However, from an objective data perspective, how profitable is the chase the market strategy? A dedicated article will be written to reveal this in the near future.