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Meme Coin Traiding: How to Avoid Rug Pulls?

Memecoins trading: How to avoid rug pulls

If you trade consistently, you will have suffered from the evil of rug pulls at some point. The advice we were all given was to never trade more than you are willing to lose, but come on, it's always frustrating to lose everything.

Many token developers make tokens in order to perform this sort of malicious practice. In fact, many make a living from this practice and have a well oiled mechanism by which to make any token they manufacture credible.

That is why I compiled a series of points that you should keep in mind when you are going to buy a memecoin so that it does not happen to you again. There are certain points of suspicion that if the token passes them, you are surely going to save yourself.

How to avoid Rug Pulls

Basically looking at liquidity, token age, community and some graphical patterns will allow you (not 100% of the time but most of the time) to avoid withdrawal of liquidity by developers.

1. Liquidity

Liquidity is a critical factor when evaluating a memecoin. It refers to the ease with which a coin can be bought or sold without affecting its price. High liquidity means that there are enough buyers and sellers to support large transactions, which reduces the risk of price manipulation.

Ideal Ratio of Liquidity to Market Capitalization

A good liquidity to market capitalization ratio is a sign of a healthy currency. We should look for currencies where liquidity is proportional to their market capitalization.

Generally, a currency with a liquidity of at least 10-20% of its market capitalization is considered stable (being highly liquid). This indicates that sufficient funds are available for trading, reducing the risk of price volatility.

Volume and Liquidity by Period

It is important to observe volume and liquidity over different time periods. Make sure they are increasing, as low liquidity is generally suspicious. Even if it's not a scam, a massive sell-off could sink the price, and you could end up being theexit liquidity.

2. Age of Coinage

The age of a coin can be a strong indicator of its reliability. Older coins have a proven track record and have likely survived various market conditions. They are less prone to being scammed compared to newer coins, which can be more volatile and risky.

Age References to Search

Ideally, look for coins that have been around for at least two months. This duration allows initial enthusiasm to settle in and provides a clearer picture of the coin's performance and stability.

Coins that have survived beyond this initial phase often have more robust communities and developer support.

Generally, Observe the Currency Time

While you may never get a 100x return without getting in within the first few minutes, you also dramatically reduce your chances of scams or massive sales.

3. Community Vibes

A strong and active community is the backbone of any successful memecoin. It fosters trust and ensures continued interest and engagement, which are crucial to the long-term success of the currency.

A strong and active community is the backbone of any successful memecoin.

How to Assess Community Engagement

Join the currency's Telegram or Discord groups to gauge the community vibe. Look for active discussions, positive interactions and the presence of developers. A welcoming and vibrant community indicates a supportive environment and a higher likelihood of coin success.

Networks and Real Participation

Active social networks, especially Telegram and Twitter (X), which have real participation and not bots, are essential. A well-done website is also a plus and builds trust.

4. Chart Patterns

Chart pattern analysis can provide information about a currency's price movements and its potential future performance.

Look for currencies making higher lows, indicating an uptrend. This pattern suggests that the currency is gaining strength and will likely continue its upward trajectory.

Warning Signs

Be wary of currencies with erratic price movements or sharp drops without recovery. These patterns often signal instability and an increased risk of losing your investment.

Transactions and Bot Activity

Watch the transactions to make sure they are not just bots trading with each other. Although volume bots ($0.01 quick buys/sells) are not necessarily bad, they can be abused.

5. Other Key Factors

There are other key factors in assessing whether there is a rug pull in progress that I will show you:

Liquidity Blocked and Mint Authority Disabled

It is essential that the liquidity is blocked and the minting authority is disabled. Sometimes, it is necessary to do some research to verify the minting authority.

Review Headlines

Make sure that a single person does not own a large amount of coins, or that several people do not collectively own a significant amount, as this could lead to an orchestrated mass sale.

Headline and Transaction Pattern Counter

Verify that there is a real and varied amount of wallets making purchases. Sometimes, you will see good volume but only one or two wallets exchanging coins with each other.

Uses Verification Tools

Use tools like that can tell you about some of these factors and also determine if it is a "honey pot" (you can buy but not sell the coin).

Solutions and Best Practices

Here's what you should take away from all this:

Verification of Contract Security

Before investing in any memecoin, take the time to verify the contract. Use tools like Etherscan or SolScan to look for any red flags, such as the presence of features that may freeze funds or alter transaction fees. Also, research the development team and read reviews from other merchants.

Understanding and Monitoring Liquidity Pools

Make sure that the memecoin has sufficient liquidity and that the liquidity pool is locked or backed by reliable parties. Tools such as Uniswap and PancakeSwap provide information on liquidity status. Avoid coins with unlocked liquidity or suspicious liquidity patterns.

Set Realistic Profit Targets

Set realistic profit goals and stick to them. Instead of aiming for 100x returns, consider more achievable goals such as 2x or 3x. Use stop-loss orders to protect your capital and take incremental profits to lock in your dividends.


Trading memecoins is exciting and a lot of fun in my opinion. But, like all such volatile assets, it carries its risks.

I think all of us in this world of memecoins are familiar with and somewhat live with rug pull. But, obviously, our goal is to avoid it at all costs.

Surely more than once we convinced ourselves with a memecoin that we liked a lot and we had blind faith in it, but it ended up being another rug pull and again we lost our faith in humanity. But don't worry, practice this guide and you'll be fine.

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