Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- ChatGPT has limitations, but a trader can use the bot to improve ideas.
- Easy and fast trading strategies for various time frames can be quickly formulated and coded using the bot.
The internet was taken by the ChatGPT chatbot in December 2022. The technology is relatively new and available to the general public and has convinced many users that it is more than a fad.
The bot can be used to write poems, make jokes, and write cover letters, and has even been used predominantly in academia. So much so that ChatGPT was banned from New York City public school devices, as it could inspire cheating.
While many of these topics have already been discussed online, we wonder, is there any other way ChatGPT can provide its expertise?
Why not apply the bot to price analysis? For starters, the bot cannot access live data nor can it search the web. Unfortunately, ChatGPT is not the place to go when we want to get price predictions for a coin like Shiba Inu.
Read Shiba Inu Price Prediction 2023-24
The bot is also extremely stubborn: it steadfastly refuses to even try to predict what the price of any crypto asset might be in the future. Meanwhile, it does a great job of reminding the user to do their own research before investing and to carefully manage the risks taken.
Can ChatGPT provide Pine Script code for merchants? Surely!
Yes, ChatGPT is not a financial expert or a business guru, but he can mass-produce code. Technical analysis in TradingView uses the Pine Script language, something that ChatGPT can use and provide code snippets. So we asked the bot to write some code to determine if an asset is in an uptrend or downtrend. Simple, right?
Unfortunately, we couldn’t compile the code into TradingView. However, that didn’t mean we couldn’t use ChatGPT’s tips on strategies and tweak them. We ask the bot for a simple intraday trading strategy based on Stochastic RSI, RSI and Simple Moving Averages.
A basic strategy, being the short SMA of 14 periods and the long of 28 periods. How effective is it? Before we find out, it is important to note that this strategy does not provide any rules for setting stop-losses, and the take-profit depends on the Stochastic RSI having a crossover opposite the one used to enter.
Using the indicators built from TradingView and for these specific periods, let’s see if ChatGPT can generate any returns on the Bitcoin 15 minute chart.
Above, we can see that three trades matched all the entry criteria: moving average and stochastic crossover and the RSI is above or below 50 to go long or short, respectively. This was indicative of a mean-reversion strategy, but momentum-following traders can use RSI > 50 as a base to go long and RSI < 50 to go short.
Evaluate the performance of lowest time frame trades made against set criteria using ChatGPT
The operations performed had one success, one failure, and one operation with an R:R of 1.42. Together they achieved an RR of +2.64 over three transactions, but to perform an effective backtest, three transactions is not a sufficient sample size, as one would need to get closer to three hundred.
Therefore we can see that a large part of filtering and generating signals corresponds to us, the user. A user can modify and play with the code provided by ChatGPT, and bug it to use different flags, to see if better results can be achieved.
Let’s try using the Supertrend indicator and the RSI to generate buy and sell signals, with the Stochastic RSI to give relatively more favorable entries. This is an idea that is following momentum, and we can use the findings for Shiba Inu to see if it generates any results.
The entry conditions are explained by the bot, and we modify the stop-loss and take-profit conditions. Stop-loss is on the Supertrend at the time of entry, with the invalidation being a Supertrend reversal.
Meanwhile, take-profit is the next stochastic cross in opposite conditions to the entry (above 80 crosses in the event that the entry is less than 20 crosses, for example). We found that the 15 minute chart gave four trades from December 12-15, at +3.13R. Some sub-optimal trades were also suggested, such as the +0.93R.
Once again, it must be emphasized that the sample space for this strategy was small. The point is not the effectiveness of the strategy, but the fact that the trader and the bot can work together to find solutions in an attempt to beat the market.
When asked about sub-optimal entries, ChatGPT responded that technical analysis concepts like trend lines, Fibonacci retracement levels, candlestick patterns, and price action setups like inside bars are used. can use to provide better inputs.
Dozens and dozens of indicators can be used in the TradingView. Free accounts can only use two indicators at a time. That doesn’t have to stop the intrepid market student. Volume indicators such as OBV, A/D and CMF can be used. The ADX indicator can add confirmation to moving average crossovers. Or, fair value gaps/inefficiencies at important Fibonacci retracement levels, such as 61.8% or 78.6%, can be used to follow the trend.
The possibilities are endless and one can use ChatGPT to refine their ideas. Come out and have fun! But before that, we need to answer a question that ChatGPT didn’t ask. Where exactly is Shiba Inu headed? To the moon?
Shiba Inu faces short-term rejection in resistance, but another 30% rise could materialize soon
The rally from $0.00000817 was used as a low to plot a set of Fibonacci retracement levels. These levels have been held by price, which suggested that resistance levels to the north could be held as well. This meant that the bulls can look to take profits at the 23.6% extension level. This level has some confluence with the horizontal level of significance at $0.000013.
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At time of writing, SHIB fought hard to break above the $0.000011 resistance area. This level was a strong support zone in early October. Furthermore, the rally at the end of that month also saw a reaction in this area.
Therefore, buyers can wait for a move above $0.000011 and look to buy a retest of the same, targeting $0.0000131. Another possibility was a pullback to the 50% mark at $0.0000096, which was broken as resistance a few days earlier. This is because the pocket of $0.0000095-$0.00001 has been noticeable since the November crash. A revisit to this area may offer shopping opportunities.
source: ambcrypto.com
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