Trading With ChatGPT
ChatGPT is an AI-powered chatbot that can be used for day trading stocks, forex, cryptos and other assets. It can support technical and fundamental analysis, provide insights into market sentiment, and help identify entry and exit points. Traders are also using ChatGPT to create scripts for trading bots, though with mixed results.
This tutorial will explain how to use ChatGPT for trading, from use cases and fees to the pros and cons of turning to artificial intelligence to support investment decisions.
Brokers With AI Trading
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More about AI Trading and Brokers with Machine Learning
What Is ChatGPT?
ChatGPT is an advanced chatbot that can provide intelligent responses to questions and prompts. Launched by OpenAI in November 2022, it was developed using various learning techniques, including being fed conversations to understand how to interpret a prompt and give a response.
ChatGPT is most well-known for its text chatbot application, however, it provides four additional services. This includes the generation and editing of images, code writing and teaching, model optimization and text comparisons.
The text ChatGPT system is made up of a series of models called DaVinci, Babbage, Ada and Curie, each with different development iterations. These models have separate purposes with trade-offs between capability and speed. The DaVinci model is particularly popular due to its functionality but it comes with the drawback of taking the longest amount of time to compute. As this is the most capable model, it is usually the best for retail investors that want thorough responses when using ChatGPT for trading.
How To Trade With ChatGPT
ChatGPT cannot pick stocks or offer trading advice but it can support with market analysis. This includes scanning social media channels and news announcement to gauge investor sentiment as well as offering insights into events that may impact a company’s share price.
An example of how ChatGPT can analyze a stock can be seen in the image below.
While the response is fairly short, it provides near-instant insights and is particularly useful for quickly getting a view of upcoming key dates. Traders could then also drill down into specific elements of the answer provided, for example, requesting further details on the expected headlines at the annual shareholder meeting, and how these might influence the company’s share price.
However, it is worth noting that the insights are fairly high-level and OpenAI currently makes it difficult to verify the original source and accuracy of the information.
It is also worth pointing out that ChatGPT is mainly effective when prompted about well-known stocks and assets, such as those on the Nasdaq. Its knowledge of lesser-known stocks with smaller market caps is less comprehensive, though this is likely to improve over time.
The other area where ChatGPT can support trading is developing scripts that automated robots can use.
You can see an example of this in the image to the right where ChatGPT is asked to write a script for an Expert Advisor (EA) to open call options on AMZN when the asset is believed to be oversold.
When using ChatGPT to create an automated trading strategy, you are not limited to using a single indicator. In this example, both the relative strength index and moving average convergence divergence are used.
Also, while Python is used here you can request scripts in other languages such as MQL4 and MQL5 for the MetaTrader platforms or Pinescript for TradingView.
The key benefit here is that ChatGPT can help create trading code using simple words and prompts. Retail traders do not need extensive coding knowledge or technical expertise.
With that said, ChatGPT has several key limitations when it comes to writing scripts for trading. Firstly, the AI tool may not have sufficient domain knowledge, i.e. a thorough understanding of trading concepts and technical analysis. Also, ChatGPT is restricted in terms of language capabilities. It uses a text-based language model which may be unable to create complex code structures. Finally, it may struggle to adapt to new tasks outside of the patterns and data that it was trained in.
Ultimately, ChatGPT has not been built to complete tasks that need specialist knowledge or language capabilities. As a result, make sure you backtest any programs.
Pros Of Using ChatGPT For Trading
- Gauge investor sentiment by analyzing news outlets, social media and market data
- Even the free account can provide useful market insights for traders
- Analysis of large amounts of information in a short space of time
- Using ChatGPT for trading helps remove emotion
Cons Of Using ChatGPT For Trading
- ChatGPT was not designed for specialist tasks, such as creating scripts for trading
- You need to post URL links to documents and PDFs you want ChatGPT to read
- ChatGPT’s knowledge is currently limited to historical data up until 2021
- Usability can vary greatly depending on the time of the day and demand
- Expensive subscriptions for access to the most powerful bots
- The quality and reliability of outputs are still largely untested
Before you start trading with ChatGPT, it is worth factoring in the cost and how this will impact your profits.
The artificial intelligence tool offers a free account, however it is only available when demand is relatively low. If you want full and unrestricted access to ChatGPT applications for trading, you will need to purchase one of the three subscription options:
- Basic – $9.99 per month, create and operate your own chatbot
- Pro – $49.99 per month, features of the Basic tier plus access to a more powerful chatbot with a better understanding of prompts and a greater level of analytics and insights
- Enterprise – $99.99 per month, all features in the Basic and Pro tiers plus API for specific uses, direct integration into other platforms and websites, and analytics for third-party sites, for example customer journey tracking
- Figure Out What You Want – While the chatbot is intelligent, you need to be precise in your prompts to get valuable responses. For example, if you want to populate an economic calendar, specify the date range rather than just typing “next two weeks”.
- Be Prepared To Review & Iterate – ChatGPT is still relatively new and because it primarily uses information already on the internet, you need to verify that its responses are correct. With this in mind, open a demo account to backtest any strategies and trade setups. For this reason, ChatGPT also shouldn’t be the only tool you use to support trading tasks.
- Complete The Tutorial – When you first register for an account, use the tutorial. ChatGPT can support with some trading activities, but you need to know how to interact with the chatbot to get the best quality responses and outputs.
Final Word On Trading With ChatGPT
Turning to software to help traders is not a new concept as algorithms have been used since the 1970s, however ChatGPT brings a novel perspective. Its ability to answer complex questions with easy-to-understand, conversational responses means it can add value for online traders. It can help analyze various assets, such as US tech stocks, and to some extent, it can support the development of scripts for automated trading robots.
Of course, using ChatGPT for trading does come with limitations. The reliability of its answers and information is largely unproven. The free version is also hard to access during periods of high demand and there remain questions about bias, copyright, and other challenges that it will need to navigate to become widely adopted in trading circles.
How Can I Use ChatGPT For Trading?
ChatGPT can support with several trading tasks. While it does not offer stock picks or fully reliable trading advice, it can provide insights into market sentiment, timing considerations, and help analyze securities.
ChatGPT can also be used to some degree to write scripts for automated trading bots to deploy. Traders can write code in MQL4 and MQL5 for MetaTrader and Pinescript for TradingView. With that said, ChatGPT may not have the domain knowledge, language capabilities or ability to manage tasks that require specialist financial knowledge and technical analysis. As a result, traders should not expect fully functioning code with zero bugs or issues.
Is It Expensive To Use ChatGPT For Trading?
It is free to use ChatGPT for online trading with the standard plan, however OpenAI has launched a subscription service. There are three pricing tiers at $9.99/month, $49.99/month and $99.99/month. Premium profiles benefit from uninterrupted access during periods of high demand, plus more powerful chatbots with advanced responses and insights.
What Is The Best Way To Use ChatGPT For Trading?
ChatGPT can help with several tasks related to trading, for example, interpreting annual reports to assess a company’s performance, scanning social media posts and news announcements to gauge market sentiment, and analyzing historical data to identify trends. Some traders also use ChatGPT to create scripts though these should be backtested and refined.
Should I Use ChatGPT For Trading?
While ChatGPT can be useful in some instances, such as gauging market sentiment, there is no guarantee that you will start making money trading online. It is best thought of as a tool that can support certain trading tasks, such as market analysis.
Can I Use ChatGPT With TradingView?
ChatGPT can write some code in Pinescript, which is TradingView’s proprietary programming language used to create charting tools and strategies. However, the results are mixed. Ultimately, ChatGPT lacks the deep domain knowledge, extensive language capabilities and specialist knowledge of technical analysis to develop advanced code structures and syntax.