375,000 times in less than a month. How to catch the next PEPE

PEPE has changed the lives of many people after rising 375,000 times in just 21 days. You can also change your life through Meme coins.

This article is a complete guide on how to find Meme Gems and exchange them for insane rewards.

I will cover four aspects: the basics of Meme coin investment, how to find and research Meme coins, the best buying strategy for Meme coins, and when to take profits.

Meme coin investment basics

When you buy any token, you are buying it on the assumption that someone will want to buy it from you at a higher price (in the future). This is especially true for meme coins, as they rely more on psychological drivers than fundamentals.

This is known in economics as the 'castle in the air theory' (popularised by economist John Maynard Keynes), whereby 'investors attempt to build a kind of castle in the air and estimate intrinsic value by considering possible future price increases'.

The goal is to build a position before other investors start buying in. But, of course, this is a gamble because the fundamental drivers of meme coins are lower than typical investments.

Therefore, you have to view meme coin investing as a gamble.

You can think of meme coins as games in a casino, and L1s like Ethereum and exchanges are the casinos.

Remember, the house always wins . We have already seen this with the significant increase in ETH consumption over the last week. More on-chain activity = more ETH burned.

This is the main difference between meme coins and casino games like roulette. When you place a bet on a roulette spin, the house automatically has an edge of about 5.26%. However, there are ways to tip the odds in your favor when investing in meme coins.

Admittedly, it’s harder to create an edge here than with other trading methods. That’s because there are so many unknown variables that can affect the success of Memecoin. But there are steps you can take to improve your chances of making a profit.

How to Find and Research MemeCoins

Here are 5 steps to finding MemeCoins and increasing your advantage.

1. Monitor rising tokens

Check out the top gainers on a site like DEXTools so you can gauge which memes are performing well from a price perspective.

2. Verify whether the token has a strong culture

A meme coin can only be successful if it has a strong community . In this space, community trumps all other variables. A meme must be interesting, fun, and easy to understand .

There are many ways to track the social performance of a token:

• Monitoring social metrics on Lunar Crush

• Determine if the token is being talked about in social media: Twitter, Telegram, Discord, etc.

• Is the token trending on Twitter, Google, DexTools or Coingecko?

3. Research fundamentals

Ask yourself:

• Who are the team members? Have they been doxxed? If not, have they demonstrated competence in building and hype?

• What are the token economics like? Is there a dilution/burning mechanism?

Honestly, when it comes to memecoins – these issues are not as important as researching legitimate projects. But it still takes some effort to help create an advantage.

One of the biggest resistances in the industry is the constant running away and attacks. While it is not possible to completely avoid this, I use 2 methods to help avoid it: doing a quick audit on Token Sniffer and evaluating wallet distribution on bubble maps.

4. Figure out whether you want to follow the leader or play a rotation game.

The “leader” usually has a higher market capitalization but less risk. For example, DOGE is the leader of the “Inu” coin. Now PEPE is the leader of the “Frog” coin.

New liquidity is first attracted to the faucet, and then flows into smaller tokens in that niche. As liquidity rotates within a particular sector, profits from smaller tokens often flow back to the faucet. This often makes the faucet a better R/R play.

The second option is to try to play the rotation game, which involves investing in smaller market cap tokens that emerge from niche leaders. This can lead to some nice gains if you time it well, but for the reasons mentioned above - it’s generally a poor quality R/R play.

5. Follow the smart money.

To find new Memecoin opportunities, you can check what whales/other successful Memecoin traders are buying. Here’s how:

• Go to Etherscan and look at early buyers of successful meme coins, such as PEPE

• Find "smart money" wallets on LookonChain

• Track their wallets on DeBank to see what they are buying

• Use these purchases as a basis for further research (looking for patterns)

Now let’s assume you have done your basic research. You have chosen a Meme Token and are ready to buy it. How do you approach trading (buying and taking profit)?

Best Meme Coin Buying Strategy

Three steps:

1. Treat it like a casino.

Investing in MemeCoins is fun, and you might get very lucky. But treat it like a casino. If you don’t walk up to the roulette table in a casino and bet the exact same amount on a single spin – you might be over-allocated.

2. Trade emoji tokens only on a separate on-chain wallet.

Do not mix your investment capital and Memecoin capital. This will help you to clearly separate your strategies and reduce emotional losses. You should be willing to lose 100% of the funds in this new wallet.

3. Use technical analysis to help you buy and sell.

Performing accurate technical analysis is difficult due to liquidity constraints and a lack of historical price data, but I find it helpful to use charts to have some sort of plan so that you are not acting blindly.

One method I have found to work well is to wait for a major correction and then go long the next HTF (High Tight Flag, a bullish candlestick pattern that usually appears in an uptrend) breakout (this works well on PEPE). This way you don't buy high. There is nothing wrong with doing DCA over a predetermined time period. No need to rush in all at once.

But if you are really feeling FOMO, sometimes there is nothing wrong with just entering the market initially. Going long 20-30% of your final position size might be a good idea. Think of it as hedging your emotions by going long.

Let's assume that the Meme coins you bought now have risen in value and it's time to take profits. What is the profit-taking strategy?

When to take profit

Memecoin can change your life quickly. But make sure you actually use the money to change your life.

Don't reinvest your profits. A simple rule is to sell your principal after doubling it. This way you can trade with your "profits" .

Technically, the remaining funds are still yours, and holding the position is not "risk-free" - but at least you are guaranteed a profit on the trade itself.

After that, every time it doubles, sell a predetermined percentage. For risk averse people, you may want to continue selling the initial principal. But if you are more aggressive, you can choose a lower percentage. For example, sell 20% or 30% for every 100% increase in gains.

This strategy works until a top is formed. After that, you may experience a severe retracement. But there are indicators that can show that a top is forming, so you can reduce your risk accordingly.

These top indicators include:

• 24-hour trading volume exceeds market capitalization

• HTF is forming lower highs

• The number of holders decreases or the growth of holders slows down significantly

• Large whales start selling

• Financing rate turns from negative to positive

No one can 100% guarantee predicting when a top will occur, but hopefully a combination of some or all of the above indicators can help you reduce your risk when a top signal occurs.