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The 7 Memecoin and Shitcoin Trading Commandments| Bankless Africa Weekly Newsletter
This is the Bankless Africa Newsletter, your one-stop plug for well-curated and up-to-date crypto and web3 news around Africa.
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Today's message is dedicated to all the new traders who have recently joined the world of DeFi. The ongoing memecoin bull run, fueled by the likes of $PEPE, has attracted a wave of new traders, exposing them to the potential for significant profits that come with memecoins and other unconventional cryptocurrencies. However, it's important to note that these investments also carry a considerable risk of losing everything.
Therefore, this issue aims to educate traders on the fundamental rules of trading in unconventional cryptocurrencies, commonly referred to as "shitcoins."
Let's dive in and explore these guidelines.
Today’s Podcast of the week is “Make We Reason Optimism”
Our podcast pick aired last Wednesday and it is a special pidgin session with Crossvic and Bintuparis discussing the basics of Optimism.
Enjoy and share your thoughts on Twitter @pidgin_parlour
The 7 Memecoins and Shitcoins Trading Commandments
Meme coins are crypto assets derived from memes or jokes on social media and the internet, while shitcoins are considered extremely risky investments due to their negligible value and utility. Although they may generate substantial profits, they lack fundamental value and are prone to significant losses in a bear market.
Dogecoin, the leading meme coin, has demonstrated impressive market performance in the past week, with a market capitalization of $10.2 billion, and a trading volume of over $142 billion.
Due to the high volatility of meme coins and the absence of intrinsic value in shitcoins, traders must exercise caution when dealing with these crypto assets. Below are a few rules and guidelines to tread the path carefully.
The Commandments of Trading Memecoins and
1. Conduct Your Own Research (DYOR) before commitment.
Before investing in a meme coin or shitcoin, thoroughly understand the risks involved. These coins can crash unexpectedly, and scammers always watch the market waiting to exploit hype and scam unsuspecting traders.
2. Observe the impact of these coins on the broader cryptocurrency market.
While the allure of quick gains may be tempting, remember that meme coins are highly risky investments. Their values can be unstable, with sudden price drops. Before investing, take time to observe their impact on the broader cryptocurrency market.
3. Don't Snooze–Stay Alert.
In the fast-paced market, taking a break from your computer puts you at risk of missing out on opportunities. To avoid losing out, set up price alert reminders on your trading platforms and ensure you can trade on your phone when you’re away from your computer.
4. Cash out on profits.
When your shitcoin or meme coin experiences a price surge, don't just take snapshots of your profits–be a profit-taking maximalist. As the value increases, take profits; cut your losses quick when it declines.
5. Respect the Hype.
Dogecoin’s market cap is $10,450,833,943 today, thanks to its unique branding and marketing campaigns. With a social volume of 1,244,231 and a social engagement score of 22,030, remember that this market is very young and irrational. So, respect the influence of memes and viral marketing, despite your own analysis and models.
6. Leverage Cautiously
Consistently generate profits in your trading and cut your losses swiftly before considering using leverage. Only consider using leverage when you consistently generate profits when degen trading, and can cut losses swiftly. Master the skill before leveraging your trades.
7. Pay Attention to the Whales.
Due to the fact that coins with lower liquidity and volume can be easily manipulated, rapt attention is essential. So, always keep track of the actions of the major players in real time.
In conclusion, to avoid heart-wrenching stories, it's crucial to follow these guidelines while navigating the meme coin and shitcoin ecosystem. While some have found success investing in these coins, it is important to acknowledge that many have also suffered significant losses. Stay informed and approach these investments with caution.
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Disclaimer: This post does not contain financial advice, only educational information. By reading this article, you agree and affirm the above, as well as that you are not being solicited to make a financial decision, and you in no way are receiving any fiduciary projection, promise, or tacit inference of your ability to achieve financial gains.