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ChatGPT by OpenAI has become one of the most important new additions to the world of business in 2023. Organizations and individuals from all walks of life have been using this new AI for a variety of tasks, including trading. Forex traders in particular have been actively trying to build strategies around the insights provided by the AI by using prompts directed at extracting as much data from ChatGPT as possible. However, the AI is not authorized to solicit financial advice, which does complicate things for traders.
While primarily a language AI, ChatGPT can provide general descriptions relating to a variety of topics, including Forex. Users can start with vague questions regarding Forex and slowly build up to a coherent strategy. It is important to note that users expecting a finance guru will be disappointed by ChatGPT, as the AI is still in its early days and will be learning new concepts continually, it might struggle with some complicated Forex trading strategies. Traders have been quick to try using ChatGPT as an expert advisor, which is an automated software that analyzes price data and backtests strategies, which is where ChatGPT really shines in the financial market.
“ChatGPT is one of those rare moments in technology where you see a glimmer of how everything is going to be different going forward.” - Aaron Levie
If you are interested in using ChatGPT for Forex trading - this investfox article is for you.
ChatGPT is a language AI created by OpenAI that uses a machine learning technique called reinforcement learning from human feedback, or RLHF to converse with humans. ChatGPT can answer questions about a broad range of topics and is best used to analyze vast amounts of data within seconds. ChatGPT can provide summaries of articles and reports, as well as definitions of concepts from a variety of disciplines.
In financial markets, ChatGPT can be used for financial summaries and backtesting, as the AI may have difficulties with complex trading strategies involving moving averages and oscillators.
There are a number of ways to approach ChatGPT to get some valuable information from the AI, but users should be ready for some trial and error along the way.
For first-time users, ChatGPT may seem like an AI chatbot that has very little use for trading strategies and financial advice in general. However, there are ways of getting around these hurdles by avoiding some common mistakes made by users when interacting with the chatbot.
Understanding these key points can help users avoid the bulk of the trial-and-error phase and get to the desired answers faster with ChatGPT.
The most common mistake traders make when asking ChatGPT about Forex strategies is specifically that - asking. It is important to understand that ChatGPT is a language model that was not designed for a financial analyst or assistant.
Direct questions that involve the AI’s opinions and forecasts for particular markets are unlikely to yield satisfactory results.
For example, asking ChatGPT to provide a forecast for the Forex market, this is what the AI answers:
Another important factor to consider when talking to ChatGPT is that the AI has an information cutoff period, which means that the chatbot does not have access to real-time information and can only analyze links to specific articles that are in its database. Even in such cases, ChatGPT can only provide a summary of the text included in the article, without considering the context of the data. Therefore, ChatGPT is unlikely to answer questions regarding analysts’ perspectives and expert opinions, as the AI does not have access to up-to-date information, nor can it specify the data provided by each expert.
For example, if we ask ChatGPT to describe what experts think about the USD/EUR currency pair, the chatbot will provide an inconclusive answer, such as this:
As already mentioned above, asking ChatGPT for direct financial advice is next to useless. The same goes for specific investment picks. Asking ChatGPT to provide a Forex pair that will result in profitable trading will bear no fruit. These are the limitations of the AI, which serves to avoid giving financial advice, as it understands that investments and trading can be very risky and may result in substantial losses for the users.
For example, let’s ask ChatGPT to pick a Forex pair to buy right now:
As we can see, ChatGPT dodges all questions that it views as attempts to solicit financial advice. While declining to give an answer, ChatGPT does provide a short guideline for responsible trading and the multitude of factors that need to be considered before buying a particular currency pair.
Now that we know what to avoid when asking ChatGPT to provide a coherent Forex strategy, we can move on to questions that have a higher chance of generating a favorable response. For example, we can ask ChatGPT to describe a hypothetical profitable Forex trading strategy, which we can build upon further.
A good way of dodging ChatGPT’s refusals to provide something resembling financial advice is to ask the chatbot to generate a hypothetical scenario/strategy. For example, this is what the AI answer when asked to provide an example of a profitable Forex trading strategy:
As we can see, ChatGPT did provide a hypothetical trend trading strategy that may have the potential to be profitable. However, the strategy is still quite vague and difficult to implement, so we can ask the AI for more specifics in the next step.
When a conversation with ChatGPT is going in the desired direction, it is important to ask the AI to expand on its previous answers and provide more specific answers. In this case, we can ask the AI to add a simple moving average (SMA) to the provided strategy:
As you see, ChatGPT provides an answer that is much closer to a coherent Forex trading strategy. We can go even further and ask the AI to write up the MQL5 code that would incorporate the SMA into the strategy.
ChatGPT can be very useful when simple lines of code are needed. In our case, we asked the AI to write MQL5 code that integrates the 200-period moving average into the aforementioned Forex trading strategy:
As seen above, ChatGPT has successfully provided the code necessary to implement the Forex trading strategy to use in practice. The AI has also provided a brief description to make it easier for traders to understand the chatbot’s reasoning behind the code. In closing, ChatGPT provided a warning to conduct thorough research before making any trade decisions and putting money at risk.
Using ChatGPT for Forex trading requires some practice and may involve trial and error. However, users can direct the flow of the conversation to arrive at a coherent Forex trading strategy that they can implement.
No. ChatGPT is not authorized to give direct trading advice to users. However, this AI can provide definitions of key concepts and can be guided by users to create hypothetical trading strategies that can be put into practice.
ChatGPT can be a useful tool in Forex trading and after some trial and error, it can come up with a coherent Forex trading strategy, which the AI can also present as MQL5 code for users to copy and use.