Original | Odaily Planet Daily
Author | Nan Zhi
Meme trading on Solana is often regarded as a 'PvP battlefield', with rapid trading rhythms and fierce market fluctuations. However, on the other hand, what we often see in news reports is that a certain smart money address has gained a thousand-fold increase after holding for several days or even several dozen days.
So, which type of trading style is more 'correct'? Is the winning factor 'diamond hands', or high multipliers, or other trading characteristics? Odaily will conduct a data backtest in this article to try to find the 'holy grail' of Meme trading.
Basic Situation
Data Source
This article selected the most recent 2000 transactions of MOODENG and LUCE, deduplicated the addresses, and filtered all transactions made by these addresses. The filtering criteria were profits greater than $5,000 and losses greater than $2,000. In total, there were 1,084 addresses and 8,858 transactions.
(Additionally: The author initially selected the earliest 2000 transactions of MOODENG and found that only 89 addresses completed these 2000 transactions, revealing a strong 'conspiracy' flavor, but this is beyond the scope of this article; readers may conduct their own research. To ensure randomness of addresses, the most recent 2000 transactions were chosen.)
Trading Characteristics
Based on the final total profits of the tokens, this article categorizes all transactions into profitable and losing types, and then separately counts the profitable transactions for each wallet.
Token holding duration: the time interval from the first purchase to the first sale.
Profitability rate: total profit of the token ÷ total investment cost of the token.
Number of purchases: how many purchases were made before the first sale.
The statistics on losing trades include:
Token holding duration, number of purchases as above
Stop-loss rate: total loss of the token ÷ total investment cost of the token.
Among them, token holding duration represents the 'diamond hands' coefficient, profitability rate and stop-loss rate represent the address's preference for profit and loss ratio, and the number of purchases represents whether it is a single purchase after identifying the target or a multiple trading strategy to average the cost.
Diamond hands, high odds? What are the winning factors?
For readers who are not interested in the process, you can directly view the conclusion as follows. Addresses with high profits clearly have differences in the holding duration of the profit portion and the stop-loss rate of the loss portion, demonstrating far greater holding patience than regular addresses, as well as broader stop-loss conditions.
Cutting losses and letting profits run
Livermore once 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 helped me make big money. It is always the unwavering positions that earn me money."
The most obvious distinguishing feature between top addresses and other addresses is that their holding time far exceeds that of regular addresses, showing a significant positive correlation, approximately holding for 6-8 days, similar to the fermentation period of top tokens on Solana.
However, we also observe that the "addresses with overall losses" have holding times very similar to those of "addresses with profits exceeding $500,000". Upon verification, these loss addresses involve a total of 817 profitable tokens. Although we cannot review the trajectory of each token, the data shows that the profit difference comes from the "profitability rate", meaning they "picked the wrong target".
Another factor that shows a significant positive correlation is the stop-loss rate. As profits increase, the stop-loss conditions are also relaxed, but the differences between intervals are not significant.
Interpretation of Irrelevant Factors
Surprisingly, the profitability rate has no direct relationship with the profitability of the addresses, with a Pearson correlation coefficient of only 0.04, indicating that there is almost no linear relationship between the two. In the case of an unstable profitability rate, it suggests that the overall profitability of the address is related to the "win rate", meaning that targeting and holding for the long term are the root causes of profitability differences among addresses.
Another factor that is significantly unrelated to the profitability of addresses is the 'number of purchases'. Whether it is a single purchase after identifying the target or a multiple trading strategy to average the cost, both are acceptable. The reason for focusing on the number of trades is that the author previously suggested in (Meme Training Manual: Rebirth as I Want to Be a Diamond Hand (III)) that following should avoid situations of multiple purchases, and this view has been further confirmed after a week's testing.
Therefore, the number of purchases can be overlooked when assessing the profitability of an address, but it should be considered a key factor in determining whether it is suitable as a following target.
Summary
This article analyzes from a macro perspective which factors are the key to winning in Solana Meme trading, further deepening the analysis from a previous article (A Perspective on One 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, it may be difficult to imitate such strategies, and it is advised that users further assess based on their own circumstances.
