No more training? There are many training courses available on the Internet, both free and paid, which can help a neophyte learn about trading. You’ll need to sort through the various offerings and find the one that’s right for you. What’s more, you’ll need to find quality training at a reasonable price. With the arrival of ChatGPT, is it possible to learn to trade for free? cryptocurrency trading ?
In this article, we’ll try to answer that question. L’artificial intelligence is experiencing a dazzling hype in 2023, but can it be useful in a field as specific and difficult as trading? As regular readers of Le Journal du Coin, we’ll assume that cryptocurrency basics are well known, and we’re particularly interested in the technical side. The information shared in this article comes from ChatGPT version 3.5. Let’s get straight to the heart of the matter.
Getting to know trading tools with ChatGPT
To learn how to trade, you need understand the tools available to the trader. The moving averages are widely used by professionals. For example, you can ask ChatGPT to make a summary of moving averages and how to use them. Here’s the AI answer:
The answer begins with a definition completely correct, simple to understand and concise. Next, AI discusses the types of moving averages: simple and exponential. It explains the difference between the two moving averages. The exponential moving averages give greater weight to recent prices.. Reading our article on moving averagesit should be noted that there are also the weighted moving averages. However, the AI lists the most commonly used moving averages.
The AI also talks about theusing moving averages. Overall, they can be used toidentify trendsserve as support and resistancebut they also provide information when crossing. Although no graphical examples are available, the summary is quite comprehensive.
For many, this can be limiting, as the visual aids understanding and retention. All in all, ChatGPT’s summary provides a good understanding of what a moving average is, and why it’s useful. The answer is pretty comprehensive, and it also gives some useful tips. links to websites (English and French) for further information. ChatGPT is able to learn the basics of an indicatorbut is it capable of learn to trade ?
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Learn to trade with ChatGPT
The aim of this section is to find out whether ChatGPT can provide us with the elements we need to develop a trading strategy. Let’s take a look at the strategy put in place by the AI, as well as its advice :
The first step is to select moving averages. To do this, the AI makes a classic choice by taking the simple moving averages over 50 and 200 periods (MA 50 and MA 200) These are the periods featured in the Wall Street Cubs article on moving averages. ChatGPT then explains that we obtain two signals based on the crossings between the moving averages :
- MA 50 rises above MA 200: the identified trend is upward, a « bullish » trend. buy signal.
- MA 50 falls below MA 200: the identified trend is bearish, it is a sell signal.
Then, a first tip is delivered. Watch out for false signals. Indeed, there are many crossovers between the 50 and 200 moving averages, and some of them may be uninteresting. The AI recommends filter these signals using technical indicators. Without going into detail, she explains that we can use the RSI (momentum indicator) or the support and resistance levels. This advice is pertinent, as it is interesting to combine technical indicators. Finally, the AI provides information on the risk management using stop-loss and take profit.
In short, ChatGPT gives us a combination widely used by traders, and tips for confirming signals. However, while AI gives the information to use take profits and stop-losses, it does not explain how to place them. Nor does it mention the risk management with the notion of risk rewardfrom risk per trade andleverage.
If we dig a little deeper and ask it how to place stop-losses and take profits, the AI gives basic information, but interesting for a beginner. They can be placed at the level of supports or resistancesplace them according to the volatilityetc. However, it makes no mention of dynamic stop-loss for example.
When it comes to risk management, AI proposes to risk 1 to 2% of your portfolio which is recommended by most seasoned traders to limit losses in the event of adverse market movements.
ChatGPT’s weaknesses when it comes to trading
Even if the AI can send us links, it’s still a challenge impossible to provide non-textual answers. This can pose problems for beginners who are now looking for content with graphics or in video format.
Also, ChatGPT learns to respond thanks to its learning, but it has no trading experience. Trading is not just the result of a strategy, unless it’s implemented via a trading bot. For example, it’s hard to get a beginner to understand the importance of backtestingand especially the psychology to adopt. In fact, it is complicated to ask the AI questions concerning a period when the trader is stringing together losing trades. Some will, for example reduce the size of their positionsothers will move several days without trading.
The aim of this article was to determine whether ChatGPT can learn to trade, or not. First and foremost, ChatGPT is able to give us information about technical indicators. He clearly told us what a moving average was, and what it was used for. Although the summary left out a few details, it was still relatively complete. ChatGPT doesn’t seem to be a substitute for years of trading experience. But that’s hardly a surprise.
What’s more, if you want to go further, you often need to know the basics. Artificial intelligence won’t have the reflex to mention all the details that need to be taken into account to learn trading. This is particularly true of risk management, where it makes no mention of risk rewards or dynamic stop losses. All in all, it’s fair to say that trading training through a professional has added value, even with the arrival of AI.
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