May 18, 2023 0 458

How to Use ChatGPT to Research the Hottest AI Stocks to Trade

In this article, we will be looking at how to use ChatGPT to find the best stocks to trade and profit from. It can show us the best stocks to invest in, the best trading strategies, and the profitability of ChatGPT's trading strategies. Other useful features of this tool include in-depth AI analysis and simple methods for following stocks on the TradingView watchlist. 

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ChatGTP Prompt: 

What are the hottest AI stocks to buy right now? 

Large Cap Stocks: Refers to companies with a market capitalization value of more than $10 billion, and are also referred to as "big cap". A big cap describes a class of popular stocks preferred by investors for their stability. 

NVIDIA

NVIDIA is one of the stocks recommended by ChatGPT. It is a software and fabless company that creates graphics processing units (GPUs), application programming interfaces (APIs) for data science and high-performance computing, and system-on-a-chip (SoC) units for the mobile computing and automotive markets. NVIDIA is the market leader in artificial intelligence hardware and software.  Its professional GPU line is used in workstations for applications in architecture, engineering, construction, media and entertainment, automotive, scientific research, and manufacturing design.

Google (Alphabet), Microsoft, Amazon, Facebook, Intel, and IBM are the other stocks in ChatGPT output, but we will only use NVIDIA as an example in this article. 


TradingView Pine Script 

TradingView is currently one of the best free trading tools because it has so many free tools on its desktop and mobile apps. While traders can analyze most desktop tools, they cannot do so on their mobile apps because apps are typically designed to monitor previously analyzed trades entered by traders. However, the Tradingview mobile app is robust enough for analysis and trade monitoring. 

Tradingview Pine is a programming language used to create custom technical indicators for trading stocks, futures, options, forex, cryptocurrencies, and other financial instruments. It is also used to develop automated trading strategies for the platform. It is built on the Pin Programming language and is intended to be simple to learn and use. Users can create custom indicators using the TradingView Pine script to analyze market data and identify trading opportunities. These indicators can be plotted alongside technical indicators and superimposed over price data. TradingView Pine Script, in addition to custom indicators, can be used to create automated trading strategies, which can be back-tested on historical data to evaluate their performance and set up to execute trades automatically based on predetermined rules. Trading Pine script includes a variety of features and capabilities, such as support for various data types, built-in mathematical and statistical functions, and the ability to create custom user interfaces. It is an extremely useful tool for traders and investors who want to analyze and trade financial markets with custom technical indicators and automated strategies. 

Using ChatGPT to Generate TradingView Pine Script

ChatGPT can be used to generate Pine script codes, which can be useful for prototyping and testing ideas in TradingView. It is also beneficial for those new to Pine script who want to learn how to code custom indicators and strategies. 

Examples of How to Use ChatGPT to Generate Pine Script Code

To Create a Simple Moving Average (SMA).

ChatGTP prompt:

Generate Pine Script code to create a simple moving average of the closing price within 14 days. 

And the result is shown in the image below. 

Also, use the ChatGTP prompt:

Generate Pine Script code to create a simple moving average of the closing price within 14 days.

Here is the result: 

What we found amazing is its response

I apologize for the duplicate response. Here is the sample Pine Script code again. 

This AI system can recognize that it gave us the answer a few minutes ago before we asked it again, and if there were alternatives, we would have received them. This means that the bot's default setting is to provide alternatives when they are available, which is exactly what we want. 

ChatGTP prompt:

Generate Pine Script code to create a simple moving average of the closing price with a period of 14 days that is compatible with V5 of the price script and uses 'color' before any color argument and 'ta' before any 'SMA'  argument. 

And here is the result 

All these three codes can be used in the TradingView app  and here is the result: 

We can use it also to let us do more complex ideas like letting us know when there have been significant volume increases. 

ChatGTP prompt:

Generate Pine script code that turns the background color green when the volume is 50 percent or greater above the volume moving average within 14 days. 

If we copy the script and the other two above in TradingView, we are going to get the following result: 

The two moving averages are visible immediately below the candlestick chart, and the last one is green whenever the volume is 50% or greater above the volume moving average over 14 days. If we remove the first two scripts, we'll get to the last one, which is directly beneath the candlestick chart. All of the green bars represent periods when the volume is 50% or greater than the volume moving average over 14 days. 


Automated Trading Strategies with ChatGPT

Automated trading is a type of trading in which trades are executed automatically based on predetermined rules. Back-testing these strategies on historical data can be used to evaluate their performance, and they can even be set up to execute trades in real-time based on current market conditions. Using Pine Script and ChatGPT, it is possible to create automated trading strategies that can be used on the TradjngView platform quickly and easily. 

The following are the most common components of an automated strategy that can be created with ChatGPT: 

  1. Entry 
  2. Exit

The two components are critical because they determine profits and losses in executed trades, and they can be influenced by a variety of factors such as technical indicators, price patterns, or other market conditions. 

ChatGPT prompt:

Generate a Pine Script code that will enter a long position when MACD (Moving Average Convergence Divergence) line crosses above the signal line, and exit the position when the MACD line crosses below the signal line. 

And here is the result: 


ChatGTP prompt:

Rewrite the Pine script to use the 'strategy. enter()' and 'strategy. exit()' functions instead of the 'position' variable. 

Here is the result:

Pasting the last generated result on TradingView, below are the entries and exit points. 


Position Sizing of Trades 

Position sizing is the process of determining the size of a trade. This is the number of shares, The process of determining the size of a trade is known as position sizing. Position sizing is the number of shares, coins, or contracts to buy based on various factors, and it can be used in automated trading strategies to manage risk, optimize returns, and ensure that the strategy is well-suited to the size and risk tolerance of the trading account. When determining position size, keep the following factors in mind: 

  1. Risk Tolerance: The level of risk you are willing to accept. Higher risk tolerance permits larger position sizes, while lower risk tolerance permits smaller position sizes. 
  2. Account Size: The size of the account, or the amount available for trading, will also have an impact on position sizing. Larger accounts may be able to handle larger position sizes, whereas smaller accounts will need to manage risks with smaller position sizes. 
  3. Trade Reward: The potential reward of a trade, which is the difference between the entry and target prices, should be balanced with a well-calculated risk, which means that the difference between the entry and stop loss prices should be tolerable. A trade with a higher risk-to-reward ratio may warrant a larger position size, whereas a trade with a lower risk-to-reward ratio necessitates a smaller position size. 


Position Sizing with ChatGPT

ChatGTP prompt:

Generate Pine Script code to determine the position size based on a risk tolerance of 2 percent of trade on an account size of $1 000 and a risk-to-reward ratio of 2 to 1. 

Here is the result: 


Risk Management

The process of using techniques and tools to manage risk and protect against potential losses in trading or investing is known as risk management. Risk management is critical in automated trading strategies because it helps to ensure that the strategy can weather market fluctuations while preserving capital. Many different risk management techniques and tools can be used in automated trading strategies, such as stop-loss orders, which are placed at a predetermined price level to automatically exit a trade if the market moves against the trader. These can help to reduce losses and protect against large, unexpected price changes. Trailing stops are stop loss orders that are set at a percentage or dollar amount less than the market price and then move in lockstep with the market price as it changes. In addition, trailing stops can help traders lock in profits as the market moves in their favor and protect against large price reversals. 

ChatGTP prompt:

Generate Pine Script code to implement stop loss orders at a value of 5% and trailing stops at a value of 2.5% for risk management. 

Here is the result:


Putting Everything Together

Create a Pine Script strategy backtest that enters trades on MACD crosses and determines position sizes based on a 2% risk tolerance per trade, a $1000 account size, and a risk-to-reward ratio of 2 to 1 using a 5% loss order and a 2.5% trailing stop loss order with a 10% take profit order. 

Here is the result: 

We can refine it further down to make it work more effectively. 

ChatGTP prompt: 

Use strategy.position_avg_price instead of close to calculate stop loss points, remove the strategy in front of loss in the stop type argument for the strategy. exit function, plot our position size as a label above the current bar instead of a plot and include the necessary definitions for the MACD at the beginning of the code and add a strategy header above it. 

Here is the result: 


Best Practices for Using ChatGPT with TradingView

It is critical to follow best practices when using ChatGPT to generate TradingView Pine Script code to ensure the generated code is accurate, reliable, and simple to use. Consider the following tips and best practices: 

  1. Check to see if the generated code is syntactically correct. ChatGTP is not perfect, and the generated code may contain errors and syntax issues; therefore, it is critical to carefully review the code to ensure it is correct and error-free. If you run into problems with the generated code, such as errors or unexpected behavior, you'll need to debug and troubleshoot them to get them fixed. It will entail reviewing the code, looking for syntax errors, and testing various inputs. Most importantly, the clarity and conciseness of the prompts you provide will determine the quality of the generated code. Your prompts must be specific and descriptive. Avoid using language that is overly complex or ambiguous. 
  2. It is critical to thoroughly test the generated code before using it in a live trading environment to ensure that it is accurate and reliable. Back-testing the code on historical data and testing it with various inputs and scenarios may be required. 

Moving Averages and VWAP are two indicators that we are using in this article. 

Using the 200 SMA and VWAP, we can see that NVIDIA reached its peak in November 2021, then fell and began to rise again in November 2022, with a price of $218 at the time this article was written.  


ChatGPT prompt:

Create a trading strategy for NDIVA stock. 

The result is below:

Note that ChatGPT is programmed not to give financial advice as shown above; however, we can use it to generate scripts we can use for our trading strategies as shown below. 

We can use it to modify the scripts we create. 

ChatGTP prompt:

Modify the previous script. Sell the long position when the position value has increased by 3%

The result is: 

After we back-tested the generated script, we can see that we made a profit from the above screenshot. 

Conclusion

ChatGPT is a powerful tool for quickly and easily generating TradingView Pine Script code by simply providing natural language prompts and specifying the type of output you want. It can generate code for a variety of tasks, such as creating custom indicators, plotting charts, and developing automated strategies. While it can be a useful tool for accelerating development and prototyping, you must review and modify the code as needed to ensure that it is accurate and meets your requirements. Above all, make sure you thoroughly test the code before using it in a live trading environment. Overall, ChatGPT is a fantastic tool for traders and investors looking to save time and effort on coding, custom technical indicators, and automated TradingView strategies. It has the potential to revolutionize the way traders and investors analyze and trade financial markets due to its ability to generate Pine Script code based on natural language prompts. 

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