Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
On 14 March 2023, OpenAI announced the release of their newest, smartest bot so far. Reportedly, ChatGPT 4.0 is better than version 3.5 in a multitude of ways.
ChatGPT is a large-scale artificial intelligence language model developed by OpenAI that has been trained on enormous amounts of text data. This allows the bot to understand and generate responses to complex queries from the user.
It is a language model whose primary purpose is to generate responses like a human. Although it tries to be accurate, the user must verify the information it generates, because the bot is not designed to be 100% accurate but rather to mimic a human.
This is an important distinction as it forces the prerogative on the user to fact-check and verify what ChatGPT says. However, it’s training on the basic use of indicators used in technical analysis appeared sound.
The bot can make logical inferences if presented with data from the indicators and can even analyze multiple indicators to make an overall inference.
The chatbot does not have access to live data such as current market prices of various assets, nor is it aware of the developments on the global stage after September 2021. Yet, it was possible to get its prediction on Cardano (ADA) and Bitcoin (BTC) prices in the coming years, and its answer was intriguing.
Taking the help of ChatGPT in devising a basic intra-day strategy
One can come up with an endless array of strategies to trade on various timeframes using a combination of TradingView indicators. The only limitation is the user’s imagination and familiarity with indicators. It is unlikely that ChatGPT can come up with predictions based on data for the prices of an asset, such as Cardano. The AI model developed by AMBCrypto, on the other hand, can.
Read Cardano’s [ADA] Price Prediction 2023-24
I began with a fairly simple task for GPT–Take the RSI and the moving averages and use them together to generate buy and sell signals for intra-day traders. After a few trial requests, the scope was narrowed down. Buy only when RSI is above 50, and use the Fibonacci numbers 13 and 21 as moving averages periods. Here was the response the bot presented –
Source: ChatGPT
And the PineScript code for the same.
Source: ChatGPT
I tested the strategy ChatGPT came up with on the Cardano chart. Since the point was to use the bot’s help to generate scalp trade signals, the 2-minute timeframe was used. Here are the results –
Source: TradingView
The strategy is to buy when RSI is above 50 and the moving averages are bullish. However, it must be noted that the exact entry and exit criteria are not clear enough.
Hence, we will modify the entry rules and enter when the price has retested either of the moving averages as resistance or support (for short or long positions) and when the RSI fell below (or climbed above) neutral 50.
As for exit, we shall target an R: R of 2:1, which means that we need to be successful at least 33% of the time to break even, but more on that later.
A demonstration of this began after the bearish crossover on the 2-minute chart late on 31 March. In total, we had at least seven clear trade signals within 9 hours which cumulatively produced +6.25R. This meant that risking 1% per trade would have given a 6.25% return within ten hours of watching the charts.
It must be stated that many more trades were possible based solely on the rules. Since the trend was shifting at that time, they would have been forced to close to breakeven and could be confusing to decipher for the reader.
Moreover, they would cost trading fees and eat into the scalper’s profit, which is another factor that highlights how dangerous scalping can be.
Can GPT predict ADA’s 2023 move?
The bot refuses to venture into the business of predicting crypto prices in future years, even as a fun pursuit. To test the capabilities of the bot, I used a jailbreak method a Reddit user posted in the recent past. Using this, we asked ChatGPT what it thought the price of Bitcoin and Cardano would be in 2023.
Source: ChatGPT
This is an extremely optimistic view. However, we must consider factors such as the inflation that peaked in 2022, as well as geopolitical events such as the invasion of Ukraine in March 2022. When I gave the bot this information and asked it to revise its prediction/guess, it came up with interesting figures.
Source: ChatGPT
Well, this is extremely close to the $68.7k ATH that BTC reached in November 2021, and the $3.1 ATH that ADA reached in early September 2021.
As the U.S. Securities and Exchange Commission (SEC) filed lawsuits against Binance…
Read More: I asked ChatGPT what the future holds for Cardano, it said…