Introduction
As we reach the third article in our meme coin teaching series - the smart money analysis article! The author knows that after playing in the meme coin space for a while, you will begin to encounter what is known as 'smart money addresses'. Finding the right smart money can give you a head start and fill your pockets, while finding the wrong smart money can leave you hanging on a cliff and losing everything!
To avoid such tragedies, today I will teach you 4 quick tips to determine whether the 'smart money' you find is a master among masters or just useless fake smart money!
What is the true use of smart money?
If friends who have had some contact with smart money monitoring believe that many people initially go crazy climbing through smart money, and after adding everything to monitoring, it feels like they have everything in place. However, as the alarms from the monitoring tool keep ringing, it can become a bit overwhelming to know where to start.
You look at the token names and CA in the monitoring tool, completely clueless about what the narrative is speculating on or how much to buy? Should you follow the alarm and rush in? After buying, should you hold like a paper hand or a diamond hand? You have no feeling for the strength of the narrative. Therefore, I believe the correct way to use smart money is to 'strengthen your sources' and 'receive early information'.
Therefore, the purpose of monitoring smart money is to let yourself know what concepts the market is speculating on today. We can use the tokens purchased through smart money to push to Twitter, WeChat, Discord, Telegram, various forwarding groups, etc.
Go search through each community and see what everyone is discussing at the moment. Then, use your own experience to judge whether the narrative of the project has potential, and whether the entry perspective suits your taste. This is what I personally consider to be the correct way to use smart money.
At the same time, we also need to build our own smart wallet. A direct method is to look at the addresses that earn the most in each project or the earliest addresses that made purchases, and then add them to our own smart wallet. Gradually, you will find that the market is getting closer to you, and your response speed to market hotspots is getting faster!
4 Tips to Help You Identify 'Truly Useful' Smart Money
The smart money that makes you think is good must have stood out from the basic filters, for example, a high win rate with rich profits over 30 days, seeming like a very profitable address.
In fact, just looking at the address win rate and earnings is not enough, as there will be a mix of many 'landmines', such as market snipers, follow-up cut bots, devs, hoarders, etc.
Below are the 4 specific filtering criteria we set for identifying 'manual real experts'.
Tip 1: 30-Day Win Rate Too High
Judgment method: If the win rate over 30 days exceeds 80%, you should be vigilant and check the main sources of profit.
Basically, the 30-day win rate of meme coin experts falls between 45% and 75%, which is considered normal. An excessively high win rate may indicate addresses belonging to follow-up cut bots, MEVs (sandwich bots), snipers, devs, etc.
Additionally, holding onto unrealized losses without selling is not considered a transaction in GMGN. If you only sell coins that are profitable and hold onto those that are not, the win rate of the address will also be quite high in GMGN.
Tip 2: Hoarding Address
Example Address
Judgment method: Sort 'unrealized profits' in ascending order, which will prioritize the coins with the most losses, allowing us to judge whether it is a hoarding address.
Addresses of the hoarding type may have made a lot of money, but more often, they hoard dozens of zero-value coins, only to end up with one or two valuable coins. For regular players, it's hard to withstand several rounds of buying and then losing everything, especially since these addresses usually contain more than a few dozen worthless coins, and we often collapse before we see dawn.
The author personally hopes that friends who are new to tracking smart money will not monitor addresses that belong to hoarders. The reason is simple: without enough familiarity with the meme coin space, we hope the signals are as clear as possible.
Tip 3: Pay Attention to Rug Pull Ratio
Example Address
Judgment method: If the number of rug pull participations accounts for more than 40% of total transactions, it is not recommended to use this address.
In GMGN, low liquidity or rug pull projects will be marked with a red warning symbol. These projects usually go to zero within an hour of purchase, mostly belonging to the flow of money by manipulators.
Perhaps he is an expert at playing on the flow of money in and out. Unless you can also closely monitor the market and replicate his trading patterns, there is little reference value. The probability of stepping into a trap when referring to such signals is relatively high.
Tip 4: Quick Entry and Exit Operation Mode
Example Address
Judgment method: If the interval between buying and selling is often less than 30 seconds, or even completed within 10 seconds.
Sometimes you may find an address where the entire transaction record shows profits, with an excellent win rate and profit-loss ratio, and it is neither a hoarding address nor a heavy rug pull participant. At first glance, it seems perfect!
At this point, a final check is needed to look at the transaction times of each token. If quick entry and exit within a short time dominate the main source of profit, then the probability of MEV or BOT is very high. The detailed method is to open the transaction record on the wallet page, look at the buy and sell times of each token, or filter by entering the address on the K-line page to directly view the price points and records.
Although real players may also enter and exit within a minute, the key comparison is: 'If the source of profit is all from this model', then this address is likely to be the type that leaves people hanging on the cliff.
Conclusion
There are many uses for smart money addresses; for example, some people specifically refer to the movements of new wallet addresses of manipulators; some people particularly like to look at hoarding addresses, and often these strange actions have a higher probability of being insider information, so this type of address does not fit within the 4 filtering criteria discussed today.
The method shared today focuses on finding 'manual real experts', ensuring that the smart money you add to your monitoring tools is meaningful. The author does not wish for you to add a bunch of meaningless smart money to your monitoring, which could instead lead to confusion in your judgment. Finally, once you are familiar with how to identify specific types of addresses, you can quickly filter and process smart money according to your needs!
Dear readers, you might be wondering: 'Where can I learn and see these in-depth analysis methods and valuable data sharing?'
Click the link below to learn
https://da.studio/
