ChatGPT suggests that ADA's price will reach $8 by the end of 2023. Its on-chart metrics are, however, rather ambiguous.
ChatGPT suggests that ADA’s price will reach $8 by the end of 2023. Its on-chart metrics are, however, rather ambiguous.
This is an important distinction as it forces the prerogative of the user to fact-check and verify what ChatGPT says. However, its training on the basic use of indicators used in technical analysis appeared sound. 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 the RSI is above 50 and use the Fibonacci numbers 13 and 21 as moving average periods. Here is the response the bot presented:I tested the strategy ChatGPT came up with on the Cardano chart.
It must be stated that many more trades were possible based solely on the rules. As the trend was shifting, they would have been forced to close to breakeven and could be confusing to decipher for the reader. Back-testing aside, any profitable trader must be able to limit their losses. Each trader is probabilistically bound to run into a streak of losing trades. Some key elements of risk management ChatGPT identified were diversification, position sizing, stop-loss orders, risk-reward ratio, and risk tolerance.
The trading system isn’t broken, but the probability is it will spoil your profits. Trading is not a sprint to the finish line, but an excruciating marathon where your biggest enemy is yourself–Fear and greed, in particular. Traders will likely not be successful 100% of the time. If they are correct about 30% of the time, they could still be profitable. Even a trader with a 5%-win rate could find himself in prof in the long run.
Try to recall the probability chart presented earlier. Even with a 60%-win rate, there is still a 92% probability that one will see a streak of 4 consecutive losing trades within a span of 100 trades.
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