# 2. Essential Trading Skills

#### 1.2 On-Chain Data Intelligence

On-chain data is the most authentic and timely first-hand information, often predicting market changes in advance.

**Core On-Chain Indicator Monitoring:**

1. **New Token Issuance Monitoring**
   * Real-time new token radar: Monitor newly deployed contracts on-chain
   * Filtering criteria settings: Liquidity thresholds, surge in trading volume, early buyer quality
2. **Whale Activity Monitoring**
   * Train leader address tracking: Mark and track 50-100 high-win-rate addresses' behavior
   * Wallet classification: Categorize wallets by investment style, win rate, and capital scale
   * Fund flow analysis: Observe which new projects whale funds are flowing into
3. **On-Chain Abnormal Behavior Identification**
   * Sudden increase in buying pressure: Large number of buy orders in a short time
   * Developer address activity: Abnormal activity in project developer wallets
   * Liquidity changes: Significant increases or decreases in liquidity pool funds
   * Abnormal trading patterns: Such as numerous small scattered purchases converging on one project
4. **DEX Transaction Data Analysis**
   * Trading volume change rate: 24-hour trading volume growth compared to previous period
   * Buy-sell ratio: Ratio of buy/sell orders
   * Liquidity depth change: Rate of change in liquidity pool size
   * Average transaction size: Small retail vs. large smart money

### 2. Trading Decision Framework

With abundant intelligence sources, the next challenge is how to transform them into effective trading decisions. A scientific decision framework can help you make rational judgments in an information-overloaded environment.

#### 2.1 Attention Economy Model

Meme coins are essentially products of the attention economy, with their prices reflecting the allocation of market attention resources.

**Narrative Type Assessment**

| Type                 | Rating | Characteristics                                                                                                | Examples                                                          |
| -------------------- | ------ | -------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- |
| Cultural Resonance   | ★★★★★  | <p>• Aligns with broad internet culture<br>• Has strong emotional triggers<br>• Easy to spread and imitate</p> | PEPE (famous cartoon frog meme), DOGE (dog meme/Musk endorsement) |
| Current Events       | ★★★★☆  | <p>• Associated with major current events<br>• Has time sensitivity<br>• Triggers broad social discussion</p>  | TRUMP (presidential election), FIGHT (breaking events)            |
| Celebrity Effect     | ★★★★☆  | <p>• Direct endorsement by famous figures<br>• Huge fan base<br>• Possibility of continued exposure</p>        | PNUT (mentioned by Musk), BRETT (created by celebrity)            |
| Innovative Narrative | ★★★☆☆  | <p>• Original meme or concept<br>• Viral spread potential<br>• Easy to understand and share</p>                | NEIRO (new pet), GOAT (first AI Meme)                             |

**Attention Cycle Model**

Meme projects typically go through the following attention cycles:

* Incubation period: Initial spread in small circles, low market cap, few informed people
* Acceleration period: Begins to spread to broader communities, price starts to rise
* Explosion period: Widely noticed by mainstream communities, price rises rapidly
* Saturation period: Almost all potential buyers are aware, upward momentum weakens
* Recession period: Attention shifts to new projects, price drops

**Attention-Based Trading Strategy**

| Attention Stage | Score  | Action                        | Risk           | Potential Return |
| --------------- | ------ | ----------------------------- | -------------- | ---------------- |
| Incubation      | 0-20   | Small position build-up       | Extremely high | >10X             |
| Acceleration    | 20-40  | Increase position             | High           | 3-10X            |
| Explosion       | 40-60  | Take partial profits          | Medium         | 2-3X             |
| Saturation      | 60-80  | Significantly reduce position | Low            | 1-1.5X           |
| Recession       | 80-100 | Complete exit                 | Extremely low  | <1X              |

#### 2.2 Propagation Momentum Analysis

Propagation momentum is a key indicator of a Meme project's vitality, reflecting the speed and breadth of project narrative spread.

**Core Propagation Indicators**

DexOne tracks the following key propagation indicators:

1. **Social Media Growth Rate:**
   * 24-hour growth rate of Twitter mentions
   * Telegram group membership growth speed
   * Discord active user change rate
2. **KOL Influence:**
   * Influence score (based on followers and engagement rate)
   * KOL diversity (coverage of KOLs from different fields)
   * Mention quality (positive/negative/neutral)
3. **Cross-Platform Synergy:**
   * Degree of narrative spread across multiple platforms simultaneously
   * Time difference in spread between platforms (reflecting propagation speed)
   * Platform diversity (social/professional/media)

**Practical Application of Propagation Momentum**

Different propagation patterns and how to respond:

1. **Viral Spread Type:**
   * Characteristics: Explosive spread in a short time, rapidly permeating all platforms
   * Strategy: Quick entry, set profit-taking points, be vigilant for bubble burst
2. **Sustained Growth Type:**
   * Characteristics: Stable but continuous spread growth, high community engagement
   * Strategy: Phased position building, long-term holding, attention to fundamental changes
3. **KOL-Driven Type:**
   * Characteristics: Driven by a few key KOLs, spread concentrated in specific circles
   * Strategy: Pay attention to subsequent KOL behavior, be alert to sudden departures
4. **Cyclical Outbreak Type:**
   * Characteristics: Periodically gaining attention, multiple propagation peaks
   * Strategy: Position during troughs, profit-taking during peaks

#### 2.3 Market Sentiment Assessment

The Meme market is highly dependent on emotional drivers, making sentiment assessment a critical factor for trading success.

**Market Sentiment Indicator System**

DexOne builds market sentiment models based on the following indicators:

1. **Text Sentiment Analysis:**
   * Social media text sentiment scoring
   * Keyword frequency analysis (moon, rug, pump, etc.)
   * Emotional polarity (extremely optimistic/extremely pessimistic)
2. **Trading Behavior Sentiment:**
   * Buy-sell order ratio
   * Average transaction size changes
   * Transaction frequency change rate
3. **Holding Behavior Sentiment:**
   * Changes in proportion of long-term holding addresses
   * Selling intensity (selling speed)
   * Number of new holding addresses
4. **Technical Indicators Reflecting Sentiment:**
   * Price volatility
   * Short-term price trends
   * Trading volume and price synergy

**Contrarian Sentiment Trading Strategy**

Market sentiment often provides contrarian trading opportunities:

| Sentiment Level  | Market Characteristics                             | Strategy                                                   | Action                                             |
| ---------------- | -------------------------------------------------- | ---------------------------------------------------------- | -------------------------------------------------- |
| Extreme Fear     | Massive selling, negative commentary dominates     | Gradually build positions, look for oversold opportunities | Buy in batches, set stop-losses                    |
| Mild Fear        | Price decline, reduced trading volume              | Watch for price stabilization signals, prepare to enter    | Test with small positions, focus on support levels |
| Neutral          | Sideways consolidation, reduced discussion         | Observe or participate with light positions                | Set bidirectional stop-losses                      |
| Mild Optimism    | Slow price increase, positive discussions increase | Buy on dips, hold existing positions                       | Gradually raise stop-loss levels                   |
| Extreme Optimism | Explosive rise, frenzied sentiment, FOMO sentiment | Take profits in batches, control position size             | Strictly execute profit-taking plans               |

**Sentiment Extreme Value Identification**

Sentiment extremes are often important turning points:

1. **Fear Extreme Identification:**
   * Negative sentiment on Twitter >80%
   * 24-hour selling volume exceeds 20% of circulation
   * On-chain whale addresses start buying against the trend
2. **Euphoria Extreme Identification:**
   * Mainstream media begins to report on the Meme project
   * Non-cryptocurrency communities begin discussing
   * 24-hour price increase exceeds 100%

#### 2.4 Risk Assessment System

Risk control is particularly important in Meme trading, and a scientific risk assessment system can help you avoid catastrophic losses.

**Multi-dimensional Risk Scoring**

DexOne uses a 10-point multi-dimensional risk scoring system:

1. **Contract Risk (0-10 points):**
   * Code audit status
   * Permission settings (minting rights, pause function, etc.)
   * Contract upgradeability
   * Team background verification
2. **Liquidity Risk (0-10 points):**
   * Liquidity pool size
   * Liquidity lock status
   * Lock duration
   * Token address concentration
3. **Market Risk (0-10 points):**
   * Price volatility
   * Historical selling patterns
   * Related asset performance
   * Market cycle position
4. **Narrative Risk (0-10 points):**
   * Narrative sustainability
   * Competitive project situation
   * Narrative expandability
   * Degree of narrative dependence on external factors

**Risk-Oriented Position Management**

Position control strategy based on risk scoring:

| Risk Level          | Recommended Position (% of Total Assets) | Stop-Loss Setting | Maximum Single Input |
| ------------------- | ---------------------------------------- | ----------------- | -------------------- |
| Low Risk            | 10-15%                                   | Entry price -15%  | 5%                   |
| Medium Risk         | 5-10%                                    | Entry price -25%  | 3%                   |
| High Risk           | 1-5%                                     | Entry price -40%  | 1%                   |
| Extremely High Risk | <1%                                      | Entry price -50%  | 0.5%                 |

**Risk Control Practical Tips**

1. **Diversify Investment Portfolio:**
   * No single Meme project exceeds 5% of total assets
   * All Meme investments combined do not exceed 30% of total assets
   * Diversify across different narrative tracks
2. **Set Hard Stop-Losses:**
   * Pre-set stop-loss points and strictly execute
   * Use DexOne's automatic stop-loss function
   * Never move stop-loss points to "buy the dip"
3. **Pay Attention to Risk Accumulation:**
   * Monitor overall portfolio risk level
   * Actively reduce risk exposure when market sentiment is overheated
   * Regularly close high-risk positions to "reset" risk

#### 2.5 Integrated Decision Framework

Integrate the above four modules into a unified decision framework, forming a systematic trading process.

**DexOne Trading Decision Matrix**

DexOne has developed an intuitive decision matrix to help traders make quick decisions:

| Attention Stage | Propagation Momentum | Market Sentiment     | Risk Score  | Recommended Action   |
| --------------- | -------------------- | -------------------- | ----------- | -------------------- |
| Early (0-30)    | High (>7)            | Neutral              | Medium-High | Small position entry |
| Early (0-30)    | Low (<4)             | Any                  | Any         | Wait and observe     |
| Mid (30-60)     | High (>7)            | Optimistic           | Medium      | Increase position    |
| Mid (30-60)     | Downtrend            | Fearful              | Any         | Reduce/Wait          |
| Late (60-90)    | Any                  | Extremely Optimistic | Any         | Significantly reduce |
| Late (60-90)    | Declining            | Fearful              | High        | Exit completely      |
| Late (60-90)    | Rising               | Neutral              | Low         | Hold                 |

### Summary

This chapter introduced two core capabilities of Meme traders: the intelligence gathering system and the trading decision framework. By establishing a multi-layered, comprehensive intelligence network, combined with DexOne's AI-assisted tools, traders can quickly acquire and process valuable market information. At the same time, a scientific decision framework helps traders make rational judgments in an information-overloaded environment, balancing risk and return.

In the next chapter, we will delve into four key trading strategies to help you capture trading opportunities at different stages of the Meme market.