Original | Odaily Planet Daily (@OdailyChina)
Author | Nan Zhi (@Assassin_Malvo)
Meme trading on Solana is often regarded as a 'PvP battlefield', with rapid trading rhythms and drastic market fluctuations. On the other hand, news reports often reveal that certain smart money addresses have achieved thousand-fold gains only after holding assets for several days or even dozens of days.
So, what trading style is more 'correct'? Is the winning factor 'diamond hands', high leverage, or other trading characteristics? Odaily will conduct data backtesting in this article to attempt to find the 'Holy Grail' of Meme trading.
Basic information
Data source
This article selected the most recent 2000 trades of MOODENG and LUCE, deduplicated the addresses, and filtered all trades made by these addresses, with filtering criteria of profits greater than $5,000 and losses greater than $2,000 (Note: this filtering criterion comes from the deep analytical system in (Meme Cultivation Manual: Rebirth, I Want to be a Diamond Hand (3))). In total, there are 1084 addresses and 8858 trades.
(Additionally: The author initially selected the earliest 2000 trades of MOODENG and found that only 89 addresses completed these 2000 trades, revealing a strong 'conspiracy' atmosphere, but this is not within the scope of this discussion; readers are encouraged to conduct their own research. To ensure the randomness of addresses, the most recent 2000 trades were selected.)
Trading characteristics
Based on the final total profit of tokens, this paper divides all trades into profitable and losing categories, and then separately analyzes the profitable trades of each wallet.
Token holding duration: The time interval from the first purchase to the first sale.
Profit rate: Total profit of tokens ÷ Total investment cost of tokens.
Number of purchases: The total number of purchases made before the first sale.
Statistics of losing trades include:
Token holding duration, number of purchases as above
Stop-loss rate: Total loss of tokens ÷ Total investment cost of tokens.
Here, the token holding duration represents the 'diamond hands' coefficient, the profit rate and stop-loss rate represent the wallet's profit-loss ratio preference, and the number of purchases indicates whether to make a single purchase after confirmation or multiple trades to average costs.
Diamond hands, high odds? What are the winning factors?
For readers uninterested in the process, the conclusions are as follows. Addresses with high profits clearly differ in the holding duration of profitable portions and stop-loss rates of losing portions, demonstrating a patience in holding that far exceeds conventional addresses, as well as broader stop-loss conditions.
Cutting losses and letting profits run
Livermore once said: “After many years on Wall Street, after making and losing millions of dollars, I want to tell you this: My thoughts have never helped me make big money. It is always the unwavering stance that earns me money.”
The most obvious distinguishing feature of top addresses compared to other addresses is that their holding duration far exceeds that of conventional addresses, showing a clear positive correlation, averaging about 6-8 days, which is close to the fermentation period of top tokens on Solana.
However, we also see that the 'addresses with overall losses' are very close in holding time to the 'addresses with profits exceeding $500,000'. Upon inspection, these losing addresses involve a total of 817 profitable tokens, and while we cannot backtrack each token's price movement, the data indicates that the profit differences stem from the 'profit rate', meaning the 'diamond' was misallocated.
Another factor with a clear positive correlation is the stop-loss rate. As profits increase, the stop-loss is also relaxed, but the differences across intervals are not significant.
Interpretation of irrelevant factors
Unexpectedly, the profit rate has no direct relationship with the wallet's profitability, with a Pearson correlation coefficient of only 0.04, indicating almost no linear relationship between the two. The instability of profit rates suggests that the overall profitability of addresses is related to 'win rates', meaning that accuracy and long holding are the roots of profitability differentiation.
Another factor that is significantly unrelated to the wallet's profitability is the 'number of purchases'. Whether it is a single buy after confirmation or a multiple trade to average costs, both options are valid. The reason for focusing on the number of trades is that the author previously suggested in (Meme Cultivation Manual: Rebirth, I Want to be a Diamond Hand (3)) to avoid following cases of multiple buys, and this view was further validated through a week of testing.
Therefore, the number of purchases can be overlooked when assessing a wallet's profitability, but it should be a key factor to consider when determining whether it is suitable as a follow-up target.
Summary
This article analyzes from a macro perspective which factors are the keys to winning in Solana Meme trading, further delving into the prior analysis (A Perspective on a Thousand Solana 'Smart Wallets': Who is Making a Fortune? What Can We Learn?). The conclusion is clearer—'diamond hands' are the core and key to achieving top-level profits. However, for readers with limited capital, imitating such strategies may be difficult, and it is recommended that users further assess based on their own situations.
