The market fluctuates and adjusts. Here are 4 tips for playing Meme. Risks go up and opportunities go down. Although the Meme sector continues to reach new highs, blindly following the trend can easily lead to danger. Here are 10 tips I hope you know before trading Meme:
1. Price action is king. Since Meme is an attention-driven economy, PA and trading volume are the keys to continuous price discovery. A good Meme should have a history of high trading volume and high number of transactions to show real attention.
2. Use support and resistance levels to enter the market. No matter what you trade, you should be familiar with support and resistance levels. Your Meme cannot rise forever. Look for good entry points, such as S/R flips, to tip the balance in your favor.
3. Position size. Position size can make or break your strategy. I determine the position size based on the market value of the project. For Meme projects, I usually invest 1 ETH into 1M market value, and the total position is limited to 2-3 ETH. (Depending on liquidity) If your position in a large project is too small, you will need to wait longer to make a profit, which will increase your overall risk.
4. Liquidity to market value ratio Liquidity determines how much money can actually be withdrawn from an asset. Since LPs usually account for half of each asset, the actual amount that can be taken out of the pool may be much smaller than the market value shows.
Small liquidity pools lead to higher volatility, and vice versa. If you invest heavily in a small liquidity pool, you will suffer losses due to price impact.
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