Meme Stock Trading Strategy – Explained and Backtested

Meme stocks seem to be on everyone’s mind recently, with constant mentions in market summaries and analyses. These stocks gain traction on social media platforms, such as Reddit and Twitter (please follow us on Twitter), often sparking lively debate. While this is a new social phenomenon in stock investing, what is the meme stock trading strategy?

Meme stocks are stocks that have gained a cult-like following online via social media platforms, like Reddit, Facebook, and Twitter. The large communities of social media followers build hype around the stock through discussions and comments, which generate wide interest and investment in the stock.

In this post, we will take a look at the meme stock trading strategy, and at the end of the article, we prove a backtest of the strategy.

What is a meme in the stock market?

Memes are probably something you’re already familiar with if you use social media these days. A meme is a clever and amusing image that can be copied and adjusted to fit any situation. The idea is to express a concept using a single image and as few words as feasible. Following that, users of social media platforms disseminate these memes and help them go viral.

Many similarities exist between a meme image and a meme stock. Meme stocks are company shares that have grown immensely popular online and are traded on the stock exchange. Investing in meme stocks has a sense of humor as an underlying undercurrent. These investors are purchasing stock in a company that is not a smart investment and typically lacks a solid track record of successful business practices. It’s almost comical that they’re d