Spot Token Trading Strategy

When to Use

• Evaluating new token opportunities
• Deciding to buy or sell spot tokens
• Analyzing token metrics and safety
• Timing entries and exits

Core Principles

1. Risk Management

• This is the highest risk domain
• Position size max: 10% of spot balance per token
• Max 5 concurrent spot positions
• Assume any token can go to zero

2. Due Diligence Requirements

• Check contract for rugs/honeypots
• Verify liquidity depth
• Analyze holder distribution
• Review team/socials

3. Speed vs Safety Tradeoff

• New launches: High risk, high reward, fast decisions
• Established tokens: Lower risk, more time to analyze

Token Evaluation Framework

Green Flags

• Liquidity > $100k and locked
• Top 10 holders < 50% of supply
• Active social presence (not botted)
• Clear narrative/meme
• Growing holder count

Red Flags

• Liquidity < $50k or unlocked
• Single holder > 20% supply
• Contract not verified/renounced
• Dead socials or obvious bots
• Declining holder count

Instant Disqualifiers

• Honeypot contract
• Team wallet active selling
• Fake volume (wash trading)
• Copy of rugged token

Entry Strategies

Early Entry (High Risk)

• New token < 24h old
• Small position (5% max)
• Quick profit target (2-5x)
• Tight mental stop (-30%)

Momentum Entry

• Token trending on socials
• Volume increasing
• Price above recent lows
• Enter on pullback, not peak

Value Entry

• Established token
• Good fundamentals
• Price significantly down from ATH
• Catalyst expected

Exit Strategies

Take Profit Rules

• Take 50% at 2x
• Take 25% at 5x
• Let 25% ride with trailing stop
• Never let winner become loser

Stop Loss Rules

• Early entry: -30% max loss
• Momentum: -20% max loss
• Value: -15% max loss
• Exit IMMEDIATELY on rug signs

Exit Signals

• Team selling large amounts
• Liquidity being removed
• Narrative dying
• Better opportunity elsewhere

Market Timing

Good Times to Trade

• US market hours (high volume)
• After major alpha calls
• During market-wide pumps
• Following successful audits

Bad Times to Trade

• Low volume hours
• Market-wide dumps
• Right after huge pump (FOMO)
• During network congestion

Slippage Management

Expected Slippage

• Large caps: 0.1-0.5%
• Mid caps: 0.5-2%
• Small caps: 2-10%
• Micro caps: 10%+ or fails

Slippage Rules

• Set tolerance based on market cap
• If slippage warning > 10%, reduce size
• Never market buy with unlimited slippage

Checklist Before Buying Token

• [ ] Contract verified or audited
• [ ] Liquidity > $50k and locked
• [ ] Top holders < 50% supply
• [ ] No honeypot indicators
• [ ] Position size <= 10% of balance
• [ ] Clear profit target set
• [ ] Mental stop loss defined
• [ ] Slippage tolerance set appropriately