Diamond hand, high odds? The winning factors of Solana Meme trading analyzed by data

Original | Odaily Planet Daily

Author | Nan Zhi

Meme trading on Solana is often referred to as a "PvP battlefield", with fast-paced trading and volatile market fluctuations. However, on the other hand, what is often seen in news reports is that a smart money Address only achieves a k-fold increase in value after holding the coins for several days or even tens of days.

So, which trading style is more 'correct'? Is the winning factor the 'diamond hand', high leverage, or other trading features? Odaily will conduct backtesting in this article, trying to find the 'Holy Grail' of Meme trading.

Basic Information

Data Source

This article selects the most recent 2000 transactions of MOODENG and LUCE, removes duplicate Addresses, and filters all transactions performed by these Addresses, with the criteria of profit greater than $5000 and loss greater than $2000. In the end, there are a total of 1084 Addresses and 8858 transactions.

（Also, the author originally selected the earliest 2000 transactions of MOODENG and found that only 89 addresses completed these 2000 transactions, revealing a strong 'conspiracy' atmosphere, but it is not within the scope of this article's discussion. Readers can conduct their own research. In order to ensure the randomness of the addresses, the most recent 2000 transactions were selected.）

Trading Features

Based on the final total profit of Token, this article categorizes all trades into profit and loss, and then separately calculates each Walletprofitable trade

• Token Holding Duration: The time interval from the first purchase to the first sale
• Profitability: Total profit of Token ÷ Total investment cost of Token
• Number of purchases: How many purchases were made before the first sale

The statistics of loss-making trades include:

• Token holding time and purchase frequency are the same as above
• Stop-loss rate: Total loss of Token ÷ Total input cost of Token

Among them, the duration of Token holding represents the 'Diamond Hand' coefficient, the profit rate and stop loss rate represent the profit and loss ratio preference of Address, and the number of purchases represents the tendency of buying once after careful consideration or diluting the cost through multiple transactions.

Diamond hand, high odds? What is the winning factor?

For readers who are not interested in the process, you can directly check the following conclusion. The key difference of the high-profit Address lies in the holding patience of the profit part and the stop loss rate of the loss part, showing far more patience in holding than conventional Addresses, as well as wider stop loss conditions.

Cut Losses, Let Profits Run

Livermore said: "After years of wandering on Wall Street, after making and losing millions of dollars, I want to tell you this: my ideas have never made me big money. It was always the sitting that made me the money."

The most prominent feature that distinguishes top Addresses from other Addresses is that they are held for a much longer period than regular Addresses, showing a clear positive correlation, lasting around 6-8 days, similar to the fermentation period of top Tokens on Solana.

However, we also see that the holding time of the 'Overall Loss Address' is very similar to that of the 'Address with more than 500,000 USD profit'. Upon verification, these loss addresses involve a total of 817 profit tokens, and it is impossible to review the trend of each token. However, based on the data, we can see that the difference in profit comes from the 'profitability', which means that the focus was misplaced.

Another factor that obviously has a positive correlation pattern is the stop loss rate. As profits increase, the stop loss is also relaxed, but the differences between each interval are not significant.

Irrelevant Factor Interpretation

Surprisingly, the profit margin has no direct relationship with the profit capability of the Address, with a Pearson correlation coefficient of only 0.04, which means that the two have almost no linear relationship. In the case of unpredictable profit margins, it indicates that the total profit capability of the Address is related to the "win rate", which means that accurate prediction and long-term holding are the root causes of the differentiation in Address profits.

Another factor that is significantly unrelated to the profitability of Address is the 'number of purchases', whether it is a one-time purchase after careful consideration or a cost-averaging strategy through multiple trades. The reason for following the number of trades is that the author previously mentioned in 'Meme Training Manual: Rebirth of the Diamond Hand (Part III)' that it is best to avoid multiple purchases when copy trading, and this viewpoint has been further confirmed through a week of testing.

Therefore, the number of purchases can be skipped when evaluating the profit-making ability of the Address, but it should be considered as a key factor in determining whether it is suitable as a follow-up object.

Summary

This article analyzes from a macro perspective what factors are the key to the success of Solana Meme trading. It is a further in-depth analysis of the previous 'Insight into a thousand Solana 'Smart Wallets': Who is making big profits? What can we learn from it?' The conclusion is also more clear - 'Diamond hands' are the core and key to achieving top-level profits. However, for readers with limited funds, it may be difficult to imitate such strategies, and it is recommended that users make further judgments based on their own situations.