Managing Risk
Trading memecoins and low-cap tokens is inherently risky. This guide helps you manage that risk.
The Reality of Memecoin Trading
Most Tokens Fail
95%+ of memecoins go to zero
Even "good" picks can dump
Rugs and scams are common
The Goal
Not to avoid all losses, but to:
Win bigger than you lose
Preserve capital for good opportunities
Stay in the game long-term
Position Sizing
The Golden Rule
Never risk more than you can afford to lose.
Sizing Guidelines
< 1 SOL
0.05-0.1 SOL
Learning, preserve capital
1-5 SOL
0.1-0.25 SOL
Still building
5-20 SOL
0.25-0.5 SOL
Moderate positions
20+ SOL
0.5-1 SOL
Can take larger risk
Position Sizing Formula
Never Go All-In
Keep at least 50% in SOL as reserve
Spread across multiple positions
Always have funds for opportunities
Diversification
Why Diversify?
One rug shouldn't wipe you out.
Portfolio Allocation
SOL Reserve
30-50%
Low
Active Trades
30-50%
High
Long-term Holds
10-20%
Medium
Number of Positions
Beginners: 3-5 positions max
Intermediate: 5-10 positions
Advanced: Manage more if you can track
Taking Profits
The Biggest Mistake
Watching gains disappear by not selling.
Profit-Taking Strategy
Ladder Out:
2x
Sell 25% (recover half investment)
3x
Sell 25% (now playing with profit)
5x
Sell 25% (lock in gains)
10x+
Decide: sell rest or hold moonbag
Sell Initials Early
At 2x, sell 50% to recover your investment:
Remaining position is "free"
Zero stress holding
Can wait for bigger moves
Cutting Losses
When to Cut
Token showing consistent weakness
Red flags discovered after buying
Better opportunity elsewhere
Hit your stop loss
Mental Stop Losses
Set a loss limit before buying:
"I'll sell if down 30%"
"I'll sell if liquidity drops below X"
"I'll sell if key support breaks"
Don't
Hope it comes back (it usually doesn't)
Average down without strong thesis
Ignore red flags
Risk Checklist
Before Every Trade
Red Flags to Avoid
Common Mistakes
Mistake 1: Oversizing
Problem: Putting 50% of account in one trade
Fix: Max 5-10% per position
Mistake 2: No Profit Taking
Problem: Watching 10x become 0x
Fix: Always take some profits on the way up
Mistake 3: Revenge Trading
Problem: Trying to win back losses immediately
Fix: Take a break after big loss
Mistake 4: FOMO Buys
Problem: Buying because something is pumping
Fix: Have criteria for entries, stick to them
Mistake 5: Ignoring Red Flags
Problem: "It'll be different this time"
Fix: If it looks like a rug, it probably is
Risk by Token Type
New Launches (Pump.fun)
Rug probability
Very High
Volatility
Extreme
Reward potential
Very High
Strategy: Tiny positions, sell fast
Established Memes
Rug probability
Lower
Volatility
High
Reward potential
High
Strategy: Moderate positions, take profits
Utility Tokens
Rug probability
Low
Volatility
Medium
Reward potential
Medium
Strategy: Larger positions okay, longer holds
Bankroll Management
Starting Capital
Only deposit what you can lose:
Not rent money
Not savings
"Entertainment" budget only
Reloading Rules
If you lose your bankroll:
Take a break (1+ weeks)
Analyze what went wrong
Only reload if you have edge
Start with smaller size
Growing Your Account
When winning:
Withdraw some profits
Increase position sizes slowly
Don't let lifestyle creep
Stay humble
Psychology
Emotions Kill Profits
Greed
Holding too long
Set take-profit rules
Fear
Selling too early
Trust your analysis
FOMO
Bad entries
Wait for your setup
Tilt
Revenge trading
Take breaks
Mindset Tips
Expect losses - They're part of trading
Process over outcome - Good decisions > lucky trades
Stay humble - Markets can humble anyone
Keep learning - Every loss is a lesson
Emergency Protocol
If You're On a Losing Streak
Stop trading - Take 24-48 hours off
Review trades - What went wrong?
Reduce size - Cut position sizes in half
Focus on quality - Only A+ setups
If You Lost Big
Don't chase - Worst thing you can do
Accept it - Loss is real, move on
Analyze - Was it bad luck or bad process?
Rebuild slowly - No rush
Quick Risk Rules
Never risk > 5-10% per trade
Always have an exit plan
Take profits on the way up
Cut losses, don't hope
Diversify across positions
Keep SOL reserve
Don't trade emotional
Next Steps
Start trading smart
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