ChatGPT Investing
ChatGPT has been tipped as being able to predict stock movements. But can OpenAI’s chatbot really make money investing online? This guide to trading with ChatGPT explores its potential use cases, from market analysis and strategy building to financial education. Our team also uncover the risks of ChatGPT investing, along with suitable alternatives.
ChatGPT cannot be relied upon for trading and investing decisions. Its data set is limited to 2021 so it has no knowledge of today’s financial markets. The language model is also still largely untested with unreliable outputs.
Instead, leading UK brokers offer AI tools that have been specifically designed for trading:
Top 3 Brokers With AI Trading
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Established in Australia in 2010, Pepperstone is a top-rated forex and CFD broker with over 400,000 clients worldwide. It offers access to 1,300+ instruments on leading platforms MT4, MT5, cTrader and TradingView, maintaining low, transparent fees. Pepperstone is also regulated by trusted authorities like the FCA, ASIC, and CySEC, ensuring a secure environment for traders at all levels.
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Interactive Brokers (IBKR) is a premier brokerage, providing access to 150 markets in 33 countries, along with a suite of comprehensive investment services. With over 40 years of experience, this Nasdaq-listed firm adheres to stringent regulations by the SEC, FCA, CIRO, and SFC, amongst others, and is one of the most trusted brokers for trading around the globe.
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Founded in 1999, FOREX.com is now part of StoneX, a financial services organization serving over one million customers worldwide. Regulated in the US, UK, EU, Australia and beyond, the broker offers thousands of markets, not just forex, and provides excellent pricing on cutting-edge platforms.
More about AI Investing and Brokers with Machine Learning
How ChatGPT Works
ChatGPT is a natural language processing model developed by US tech company OpenAI in 2020 and released to the public in November 2022.
It uses a complex neural network architecture to understand and generate human-like responses to text inputs, basing its responses on pre-training from a massive dataset from the internet.
When a user enters a question, the model breaks down the input into smaller parts and calculates the probability of each possible response based on its pre-training. The most probable response is then chosen and provided to the user.
In practice, this allows ChatGPT to perform a dizzying array of tasks – from developing code to writing essays – and the chatbot can provide responses accurate enough to pass business, legal and even medical exams.
And the accuracy continues to improve as it is used, due to the growing data available to it. Its recent iteration, GPT-4, allows paying users to enter up to 25,000 words of text, and is better able to ‘understand’ the input and context. With the improvements gathering pace, some believe ChatGPT will soon revolutionise people’s work, social and investing lives.
What Can’t ChatGPT Do?
Despite these impressive features, any investor who spends some time using ChatGPT will quickly become aware of its shortcomings.
The first thing to remember is that this technology has limited understanding of the tasks it is being used for – rather, it selects its answers through a sophisticated method of finding the information that is most likely to be relevant.
Among other things, this means that without fact-checking, there is no way of knowing the answer your query generates is actually true. Users have already caught ChatGPT providing incorrect information in some of its responses and for investors with real money on the line, this presents a significant risk.
Moreover, while ChatGPT investing works from a vast dataset, it does not access the internet in real-time and thus cannot provide up-to-date information necessary for online trading. The most recent data available to ChatGPT was from 2021, so any stock investing guidance, for example, will not take into account recent market events or company announcements.
Finally, ChatGPT’s makers have placed limitations on the chatbot that prevent it from giving answers that include what is deemed as harmful or dangerous content, and this includes some advice surrounding investing.
If you want to use this technology to help you invest, it is not as simple as asking it which index funds to pick or whether you should long or short on a stock. You will need to ask it careful questions for a specific purpose, and you should be prepared to reiterate and rephrase your commands to guide the chatbot to the ‘right’ outcome.
How To Use ChatGPT For Trading & Investing
Despite its drawbacks, there are several ways that ChatGPT investing can, to some degree, support traders:
- Education – Since ChatGPT can provide definitions and explanations for terminology, investors can use it as an educational resource, unpacking complex trading jargon.
- Technical Analysis – Users can ask the chatbot to perform technical analysis by describing a chart or by working in conjunction with a charting platform; they can also feed in data about a company to help with fundamental analysis.
- Market Sentiment – ChatGPT can help analyse the mood of a market if users input information such as news headlines and social media posts.
- Strategy Building – Users can discuss their needs and goals with ChatGPT integrated tools available at some brokers to help develop strategies.
- Automated Trading – ChatGPT can be used to help code trading robots or integrated into platforms to run algorithmic investing setups.
Education
ChatGPT is a powerful and flexible tool for traders with an eye for self-improvement.
The communicative style of ChatGPT has diverse applications for educational purposes, but here we will discuss two basic ways it can be used.
The first method is to use ChatGPT as an educational tool to learn about the basis of investing. Rookies can input their questions about how to start investing and ask follow-up questions about any concepts they are having trouble with.
The drawback to this approach is that ChatGPT will not necessarily present the information in the most useful way for beginners. It may be better to stick to human-generated content that is written by a knowledgeable expert and can take you through the basics step-by-step.
ChatGPT can also be used as a reference tool. There are masses of new terms and concepts to get to grips with when you start investing, and anything you aren’t sure of can be typed into ChatGPT for a definition and explanation.
Moreover, the definitions can be fine-tuned with follow-up questions if you find the initial response difficult to understand or want to delve deeper into a concept.
Technical Analysis
ChatGPT is not able to directly assess charts or other visual information, but there are some workarounds available.
The first is to verbally describe what you are seeing on the chart and to ask ChatGPT specific questions about it. The chatbot can function similarly for fundamental analysis if it receives relevant data.
Note that it will require quite specific instructions to make this method work, as ChatGPT is designed not to give trading advice. To craft the right questions, you will need to describe the charts or company data in a fairly technical way, and that requires the kind of financial knowledge that would probably make the chatbot’s input superfluous.
A more practical way to use ChatGPT for technical analysis is by using the chatbot’s capacity to create code; this could allow you to create custom indicators that you can input to compatible charting software.
How To Use ChatGPT For TradingView
The example above shows a strategy that ChatGPT has created in Pinescript, the programming language used in TradingView.
A trader can copy this script and paste it into their TradingView chart to begin using it. Below, you can see the script used to analyse Glencore stock.
Note that the example above was generated only by asking ChatGPT for the code. A more productive strategy could possibly be developed by entering a clearer description of the type of code you want to generate.
Moreover, the chatbot does not get the code right every time. If you encounter an error when you enter ChatGPT’s code into your charting software, you can paste the error text back into ChatGPT, which will attempt to fix it.
Importantly though, the AI chatbot does not have expert understanding of technical analysis or the extensive domain knowledge to generate complex code structures. As a result, the outputs are mixed.
Market Analysis
Although ChatGPT is not capable of accessing up-to-date information about markets, traders can still use it as a market analysis tool by feeding in the relevant information.
This could be done in a very basic way by asking for information about specific stocks. Take, for example, this SWOT (strengths, weaknesses, opportunities and threats) analysis that ChatGPT performed on Glencore:
Note that this type of analysis could be useful for many stocks, but that it will not take into account issues that have arisen since the cut-off date for ChatGPT’s data banks.
Some traders and academics have had success with more sophisticated market analysis by feeding current data into ChatGPT.
One way of doing this would be to feed in news headlines or social media posts, which could be the basis for sentiment analysis, as you can see below:
Strategy Building
Traders looking to build new strategies may find some use in ChatGPT investing. Given the right prompts, the chatbot can take you through each stage from choosing a security and timeframe to setting up a strategy.
The example below shows a very basic way that the chatbot can be used to start developing a strategy, but the more specific your queries are, the more detailed the answers will be.
As with the other uses for ChatGPT, you should not expect the AI to build your strategy for you. Rather, the tool will lay out existing approaches for you to consider. You can ask it to elaborate with more detail on a particular setup or term, but ultimately it will be up to you to put them together.
Automated Investing
As we have seen above, ChatGPT is capable of producing code, and this may make it an attractive tool for automated trading.
Traders can use this function in whichever code their platform uses. Alternatively, they could use a code such as Python to come up with algorithms to programme their own signals, as seen in the example below.
As with some of the other examples, using this function will require a degree of knowledge from the trader as you will need to know both the right questions to ask the chatbot and what to do with the code it produces. It is, though, an intuitive tool that could make it easier for those with basic knowledge to create investing robots.
These functions may be integrated into the platforms of many online brokers and other investment firms before long, and the crypto exchange Pionex has already started.
PionexGPT allows traders to build and adapt strategies and algorithmic trading functions through ChatGPT, which can also explain the code behind them. The tailor-made strategies the trader comes up with can then be backtested using historical data on TradingView.
Pricing
Investors can use ChatGPT for free when demand is low, though the free version is somewhat stripped down compared to the paid subscription.
The paid subscription, ChatGPT Plus, is available for $20 per month. For that price, users can access the chatbot at any time and benefit from faster response times.
They will also have priority access to new features and iterations of the chatbot, such as the latest version, GPT-4.
Advantages Of ChatGPT Investing
- Large datasets provide useful information on a variety of trading and investing topics
- Takes the pain out of programming and allows even beginner traders to make use of code
- Evolving technology that will become more powerful as more features are introduced
- Communicative style allows investors to ask follow-up questions
Disadvantages Of ChatGPT Investing
- Limited knowledge of advanced investing strategies and ideas
- Answers are not always accurate and sometimes contain incorrect data
- Language models are not reliable for short or long-term trading decisions
- Significant lag between ChatGPT’s dataset and today makes relying on it for market insights risky
- Often needs expertise in a subject and creative use of prompts to generate a useful response
- Some brokers already offer specialist AI tools built for online trading and investing
- Will not give you investing advice or specific answers to queries on stock picks
Alternatives To ChatGPT
ChatGPT can be a useful tool in the right hands, but it has not reached the point where it is an indispensable part of a trader’s arsenal.
Here are some tried-and-tested alternatives to ChatGPT that you can use today:
- Algorithmic Trading is not a new development, and many brokers already offer accessible and user-friendly ways to take advantage of them. For example, Forex.com’s SMART Signals engine is a powerful tool that can analyse huge amounts of up-to-date data to provide trading suggestions.
- Educational resources available from many online brokers will usually provide similar information to the responses you will find on ChatGPT. The brokers’ resources have the additional benefit of being specifically designed for investors and will often be tailor-made for the broker’s platform and app.
- Social trading, also known as copy trading, is a simple method of investing that allows newer traders to piggyback off an established trader, benefitting from their experience by mirroring their trades. Social investing requires less effort than using ChatGPT, and unlike a chatbot, it will directly address your questions about which assets to pick.
Should You Use ChatGPT To Invest?
ChatGPT is a revolutionary tool that is flexible and can be put to good use by investors, but it is not a magic bullet for easy profits. Making effective use of ChatGPT investing requires a degree of skill that not all traders have, as you need to be able to ask it the right questions to elicit useful answers.
The chatbot can be put to work programming robots, but this will also require knowledge from traders, who will need to input the specific parameters for the bot and be able to test the code that ChatGPT produces.
Finally, be careful about ChatGPT’s responses, since it has been known to give inaccurate information and its dataset is out of date.
Instead, consider brokers with AI tools that have been specifically developed for trading and investing,
FAQ
How Can I Use ChatGPT For Online Trading?
ChatGPT cannot be used to directly place trades, and it will reject basic questions asking for trading advice, but there are several ways it can support traders. For example, it can be used as an educational resource or as a way to analyse headlines to gauge market sentiment. It can also be used to produce code to create algorithmic investing robots.
However, its outputs are not always accurate. It remains relatively untested with mixed results to date. Investors should not rely on ChatGPT investing to make trading decisions.
How Do You Use ChatGPT With TradingView?
One of the ways to combine ChatGPT with TradingView is to use the chatbot to produce code for the charting platform’s native Pinescript.
With that said, the outputs are not reliable as the AI chatbot does not have the extensive domain knowledge or technical analysis capabilities to create sophisticated code structures.
Can ChatGPT Make Profitable Trades?
ChatGPT cannot make trades on its own, and it will not give users advice about how to make specific trades. However, it can be used as a resource when planning trades or learning about online investing.
Can ChatGPT Code Trading Robots?
ChatGPT is capable of writing code for investing robots. To create a robot with ChatGPT, input a request explaining the trading parameters for the bot and the code you want it written with. If an error arises when you implement the bot, you can also use ChatGPT to address and correct this.
However, note that bots should be thoroughly backtested and there is no guarantee that the robot will make you money. Moreover, the AI does not have the specialist financial knowledge or domain understanding to produce complex syntax.
How Do You Invest With ChatGPT?
ChatGPT will not directly help you make investment decisions, and it cannot help you with up-to-date market information since its dataset is years out of date. The best way to use ChatGPT for investing is to ask it general questions related to trading or to feed in information that will help with your analysis.