How to Trade with ChatGPT. Tips and Tricks of AI Trading

AI chatbots in real-life trading

So what do AI chatbots do for traders in real-life circumstances? Some of their features are:

Pattern recognition

ChatGPT can suss out market patterns and trends from enormous pools of historical data.

Risk management

AI can spot stumbling blocks invisible to the human trader, identifying potential risks as well as opportunities. Furthermore, it can design and implement your risk management strategy for you.

News analysis

Your disembodied robot friend can figure out market sentiment and predict other market-moving events by instantly analyzing news and social media.

Portfolio optimization

The most promising opportunities are no longer fish caught in the dark. Chatbots can optimize your portfolio on an ongoing basis, while you sleep.

Trading automation

All of the above mentioned features offered by AI can be integrated with trading platforms to automate trades.

Using AI chatbots for trading: a step-by-step guide

1. Choosing the right chatbot

Key factors to consider:

• Functionality. Depending on what your trading strategy entails, you’ll need specific functions: real-time market data, automated trading, custom alerts, or what have you. Your chosen chatbot should feature those functions.

• Ease of use. When you’re trading, the last thing you want to do is get bogged down by a bad interface. Your chatbot should be a breeze to use and give you everything you need quickly.

• Customization. You’ve got to be able to set your chatbot to the specifications particular to your strategy and style.

• Integration. You need to be able to execute trades right from the chatbot, so it’s crucial that it can be integrated with whatever trading platform or exchange you’re using.

• Reliability. If your chatbot lags, that defeats the whole point. It needs to handle high volumes of traffic and data without lag or interruption.

Popular chatbots to choose from:

• TradeSanta. Specifically designed for automated crypto trading. Allows strategy customization.

• 3commas. Offers automated trading, custom alerts, and a range of trading tools and indicators.

• Haasbot. You can backtest your tools on past market moves, customize your trading strategy, and automate your trading.

• Zignaly. In addition to automated trading, custom alerts, and trading tools and indicators of many stripes, this chatbot also integrates with a bunch of crypto exchanges.

2. Training the chatbot to your trading needs

You’ll have to explain your trading style, your preferences, your risk tolerance, and your investment goals to your chatbot. You’ll have to continue honing its ‘understanding’ of what you want from it as you go.

3. Setting up the chatbot for trading

Once your trading chatbot is trained, you can connect it to your trading account and configure it so it receives whatever data it needs to.

4. Interacting with the chatbot and receiving trading insights

Ask your chatbot questions. It can give you real-time market data, analysis, and recommendations based on your preferences and trading history.

Risks and limitations of using AI chatbots in trading

Over-reliance on technology

One of the biggest risks of using AI chatbots in trading is over-reliance on the technology.

Technical issues and glitches

Another risk of using AI chatbots in trading is technical issues and glitches that can impact their accuracy and reliability.

Limited availability of reliable data

Chatbots rely on data to generate insights and recommendations, and the availability of reliable data can be a challenge in some markets.

Privacy and security concerns

Finally, privacy and security concerns are associated with using AI chatbots in trading. Traders should ensure their trading accounts and personal information are secure.

How do FBS analysts use AI chatbots?

FBS analysts, just like FBS clients, are developing daily and trying to improve their trading skills and results. Here are three insights that can make a real difference as you trade.

1. Create a trading strategy

Here is a dialogue:

FBS analyst: Hi, chat! Please give an example of a trading strategy combining the 200-period MA and the RSI.

ChatGPT: Certainly, here's an example of a trading strategy that combines the 200-period moving average (MA) and the Relative Strength Index (RSI):

Identify the trend using the 200-period MA. The trend is bullish if the price is above the 200-period MA. The trend is considered bearish if the price is below the 200-period MA.

Use the RSI to confirm overbought or oversold conditions. An RSI reading above 70 indicates an overbought condition, while an RSI reading below 30 indicates an oversold condition.

Look for a bullish signal when the trend is bullish, and the RSI is oversold. A bullish signal is generated when the price crosses the 200-period MA and the RSI is below 30, indicating a potential trend reversal.

Look for a bearish signal when the trend is bearish, and the RSI is overbought. A bearish signal is generated when the price crosses below the 200-period MA and the RSI is above 70, indicating a potential trend reversal.

Use stop-loss orders to limit losses if the trade goes against you.

Use profit targets to take profits when the trade goes in your favor.

FBS analyst: Where should I put my stop loss using this strategy?

ChatGPT: The placement of your stop loss using this strategy will depend on your risk tolerance, market volatility, and trading goals. Generally, a stop loss is placed below the recent swing low in a bullish trade and above the recent swing high in a bearish trade. This helps limit losses if the market moves against your position.

In the case of this strategy, if you are going long after a bullish signal is generated, you can place a stop loss below the recent swing low or below the 200-period MA, whichever is lower. If you go short after a bearish signal is generated, you can place a stop loss above the recent swing high or above the 200-period MA, whichever is higher.

Isn't it amazing?

2. Create a trading bot

After creating and back-testing the trading strategy, we want to automate it and create our first trading bot. You can create trading bots for MT5 using the MQL5 language. Describe your strategy as clearly as possible and pick the programming language. In our example, we will use the strategy from the previous paragraph.

After ChatGPT built a code for our bot, testing it before using it on a real account is essential. However, isn’t it a great tool to dive into the EA niche without programming knowledge?

3. Ask anything

Note that the answer can be even more accurate if you include your trading style, for example. Go ahead, try it, and share your results in the comments!