Wallets to Avoid When Copy-Trading - Odin
Content provided by Odin's team
1. Wallets That Trade Low-Liquidity Tokens
Low-liquidity tokens often have small trading volumes, making them prone to price manipulation and significant slippage. These trades tend to lack strong conviction, resembling gambling more than strategy.
Why Avoid Copying These Wallets?
Poor Entry Positions: The larger the buy size of the mirrored wallet, the worse position the copy-trader ends up with, as large trades can significantly move the price.
High Slippage: The price you receive may be drastically worse than the mirrored wallet’s.
Loss Cycles: Frequent impulsive trades can spiral into unnecessary losses.
Tip: Stick to wallets trading tokens with healthy liquidity and consistent trading activity to minimize risks.
2. MEV and Arbitrage Bots
MEV (Maximum Extractable Value) and arbitrage bots operate by exploiting price inefficiencies and transaction ordering. They often execute both buy and sell transactions within the same block. This makes them impossible to effectively copy-trade, as their strategies rely on precise timing that cannot be mirrored.
Why Avoid Copying These Wallets?
Their success depends on near-instantaneous execution, which isn’t feasible for copy-traders.
Copying them often results in poor fills or trades executed too late to profit.
How to Spot an MEV Bot:
MEV bots have a lot of transactions per token and in general.
Look for high-frequency trades through tools like Solscan.
Use wallet analyzers like Walletx or Cielo, which tag wallets based on behaviour and strategies.
GMGN makes identifying MEV wallets straightforward by displaying key statistics, including 30-day buy and sell transactions, prominently at the top of each wallet's profile.
Examples of MEV wallets:
2UkKU23eihesGRprc93yWR1CbgymmuBpSzDGw6wxMUgj
3XKT1VMehkezX4PzBa8N7PiZ8YXKZfXvnB14L6DVxd34
3XMWMUibUbGVeudLKC11cjGf7vJspQUtV4R96kH5Zg1N
3. “Farmer” Wallets
Farmer wallets are traders who exploit copy-traders by artificially inflating demand for a token and quickly exiting their positions. These wallets engage in a high-frequency buy-and-sell strategy that takes advantage of the delay in execution for copy-traders. As a result, you end up buying tokens at peak prices, only to face immediate losses when the farmer wallet dumps their holdings.
Most farmers target Pump.fun tokens because of their volatility and ease of manipulation. To avoid being exploited, it’s recommended to disable copying Pump.fun trades in OdinBot settings.
How Farmer Wallets Operate:
Initial Buy: A farmer wallet makes a large, visible purchase of a low-liquidity token. This causes the token’s price to spike, attracting copy-traders who mirror the transaction.
Immediate Sell: Moments later, the wallet dumps the token for a profit, leaving the copy-traders stuck with overpriced tokens and no chance to exit profitably.
Signs of Farmer Wallets:
Rapid Trading Activity: Trades occur within seconds or minutes, often involving large initial buys followed by equally large sells.
Unusual Price Spikes: Tokens experience sudden price surges coinciding with the wallet’s trades.
High Turnover: The wallet rarely holds tokens for more than a few seconds or minutes.
Example 1:
A farmer wallet buys 1,000 units of a low-liquidity token for $1 each. This purchase increases the token’s price to $1.50 due to limited supply. Copy-traders, seeing the spike, mirror the buy at $1.50. Seconds later, the farmer wallet sells their tokens at $1.50, taking the profit while the price crashes back to $1 or lower.
Example 2:
A wallet repeatedly trades the same token multiple times in an hour, with each buy causing a brief price increase followed by a sharp drop after the sell. Copy-traders attempting to follow these trades end up accumulating losses from repeated bad fills.
Why It’s Risky to Copy Farmer Wallets:
Their trades are not based on long-term strategies but rather on exploiting short-term demand surges.
Copy-traders often experience negative slippage (buying at a higher price than the farmer wallet) and are unable to exit in time.
Tip: Focus on wallets with deliberate, calculated trading strategies. Look for consistent holding periods, lower trading frequencies, and trades aligned with broader market trends rather than sudden, isolated price movements.
4. Wallets Trading Frozen Tokens
Frozen tokens are assets temporarily locked from transfers or sales. Copying trades involving these tokens can lead to illiquid positions where exiting is impossible.
How to Identify Frozen Tokens:
Review the token’s metadata using blockchain explorers like Solscan. Most trading platforms nowadays show this information in the “audit tab”.
Example of a token where the authority can freeze every token from being transferred:
Example of the same token on GMGN:
OdinBot’s Built-in Safeguards
OdinBot includes features to protect copy-traders:
Blocks Trades on Frozen Tokens: Ensures you’re not stuck with illiquid assets.
Price Protection: Prevents trades from being executed at much worse prices than the mirrored wallet's, ensuring fair pricing and minimizing excessive slippage.
MEV Protection: Configurable settings to balance speed and safety.
Fastest: Prioritizes speed over protection.
Balanced: A mix of speed and defense.
Protected: Maximizes safety but slows execution.
Cross-Mirror Trading Prevention: Ensures each mirrored wallet operates independently, avoiding conflicts between trading strategies.
By understanding these risks and leveraging OdinBot’s control settings, you can enhance your copy-trading strategy and minimize potential losses.
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