If you are a memecoins beginner, have been rugged and struggling in memecoin trading. This post is going to share a proven strategy to win memecoins trades. But remember, memecoins are extremely volatile, and this is not financial advice. This guide is purely for educational purposes. Let’s get started.
Understanding Order Block Trading
The strategy we’ll use is called “Order Block Trading,” a method that identifies zones of interest for buying opportunities. While it sounds like support and resistance trading, order block trading focuses more on horizontal TA (technical analysis) lines rather than parallel channels. Memecoins, unlike most other assets, tend to respect horizontal lines significantly – almost like magnets.
Step-by-Step Trading Strategy
The order block trading strategy can be broken down into four essential steps:
1. Identify High Volume, High Attention Memecoins
Start by investigating memecoins with substantial volume and market attention. Checking Twitter trends is a good starting point. Influencers like Mello Metrics (@Mello) provides daily updates on memecoins scenes and different metas, such as dogcoins, slang metas, or particular creators’ coins. Key websites like BullX and Photon highlight trending tokens, focusing on volume and price action. When looking at these tokens, seek out communities with strong marketing, teams with good reputations (preferably doxed), and collaborations with other notable memecoins. Generally, older memecoins are more favorable because they have historical data where order blocks can form.
2. Analyze Wallet Distribution
It’s crucial to understand the ownership distribution of the tokens. High concentration of tokens in a small number of wallets is a red flag. For example, if a developer controls 30% of the token supply, it increases the risk of a sudden price crash if they decide to sell all their holdings. Always check who the top holders are before investing.
3. Chart Analysis and Order Block Identification
Focus primarily on the four-hour timeframe for charting meme coins. Selecting a timeframe varies with your strategy; for longer trades, a more extended timeframe is beneficial. Drawing an order block requires identifying periods of significant lateral movements spanning several days or weeks. The key is to recognize buying interest zones. For instance, when prices persistently rebound at a particular level, forming a lateral movement, it’s a sign of a strong order block. This first pump within the order block is not a signal to take profit but rather confirmation of the token’s strength.
4. Risk Management
Once the order block is identified, plan your entry and manage your risk. For example, if you’re willing to risk 20% of your total holding on a single trade, don’t plunge all at once. Dollar-cost averaging (DCA) is a prudent strategy. Split your entries into parts and buy at different price levels within the order block to spread risk.
Applied Example: Trading $MAD
To illustrate, let’s consider the $MAD. Suppose the first entry at a $10 million market cap with a subsequent price dip allows further entries. By averaging your buys, you manage risk efficiently. If the coin’s fundamentals change or it fails to respect the order block, you can limit your losses better than if you had invested everything upfront.
Conclusion
In summary, Order Block Trading for memecoins emphasizes horizontal support levels, making them straightforward to trade, especially given their fair-launch nature. Always avoid emotional trading and DCA into positions rather than betting everything on a single trade. Recognize the importance of initial pumps, use them to gauge strength rather than taking immediate profits. This strategy, while requiring patience and discipline, has the potential to make you a successful meme coin trader.
Order block trading requires careful analysis, risk management, and the ability to read the market. Apply these strategies wisely, and may your meme coin trades be profitable.