NEW Chat GPT-4 Trading Strategy Turned $100 to $7313!

Summary

This video explores an advanced trading strategy created by the GPT 40 AI model, aiming to rapidly grow a small trading account. It utilizes three indicators: Money Flow Index (MFI), Smooth Moving Average (SMA), and Engulfing Candle pattern. The strategy refines entry conditions by closely examining MFI's overbought/oversold states and using SMA for support/resistance. Backtested results show an impressive 85% win rate with a 1:2 risk-reward ratio. The presenter advises further demo testing before live trading and offers a link to join a crypto community for more trading insights.

Takeaways

• 🚀 The script introduces an advanced trading strategy designed to grow a small trading account quickly.
• 💡 The strategy utilizes three indicators: Money Flow Index, Smooth Moving Average (SMA), and Engulfing Candle pattern.
• 🎨 The Money Flow Index is adjusted for better visibility with color changes in the chart settings.
• 📈 The Smooth Moving Average (SMA) with a period of 100 is used to identify market trends and act as support or resistance.
• 🔄 Engulfing candle patterns signal potential trend reversals, with bullish patterns indicating a likely price rise and bearish patterns suggesting a likely price fall.
• ✅ The refined strategy includes specific rules for entering long and short positions, focusing on trend identification, price retracement, and overbought/oversold conditions.
• 📉 For a long trade, the market must be in an uptrend, the price must retrace to the SMA without closing below it, and the Money Flow Index must show an oversold condition before a bullish engulfing pattern forms.
• 📈 A short position is taken when the market is in a bearish trend, the price retraces to the SMA, and the Money Flow Index becomes overbought, followed by a bearish engulfing candlestick pattern.
• 💹 Backtesting results show an 85% win ratio and a maximum drawdown of only 2.5%, starting with a $100 account and risking 5% per trade.
• ⚠️ It is advised to test the strategy on a demo account before trading live due to the higher risk involved in the strategy.

Q & A

What is the main topic of the video script?

The main topic of the video script is the introduction and explanation of an advanced trading strategy created with the help of an AI model called GPT 40.

What are the three indicators used in the trading strategy mentioned in the script?

The three indicators used in the trading strategy are the Money Flow Index, the Smooth Moving Average (SMA) set to 100 periods, and the Engulfing Candle indicator.

What does the Money Flow Index measure and what does it indicate?

The Money Flow Index measures the buying and selling pressure in a market over a specific period. It combines price and volume data to identify overbought or oversold conditions, with readings above 80 indicating overbought conditions and readings below 20 indicating oversold conditions.

How does the Smooth Moving Average (SMA) differ from the Simple Moving Average (SMA)?

The Smooth Moving Average assigns more weight to the most recent prices, resulting in a smoother line on the chart that reacts more slowly to sudden price changes. It helps identify market trends and can act as support or resistance.

What is the significance of an Engulfing Candle pattern in the trading strategy?

An Engulfing Candle pattern indicates a potential trend reversal. A bullish engulfing pattern suggests the price is likely to rise, while a bearish engulfing pattern suggests the price is likely to fall.

What are the rules for entering a long trade according to the refined strategy?

For a long trade, the market must be in an uptrend, the price must retrace to the SMA without closing below it, the Money Flow Index must be oversold (confirmed by a green circle), and a bullish engulfing candle must form as the Money Flow Index leaves the oversold zone.

How should a trader manage their stop loss and target after entering a trade?

After entering a trade, the stop loss should be placed below the swing low for a long trade or above the swing high for a short trade. The target should be set at twice the risk. Once half the profit is made, the stop loss should be moved to break even.

What was the win ratio and maximum drawdown from the backtesting of the strategy?

The backtesting of the strategy resulted in a win ratio of 85% and a maximum drawdown of only 2.5%.

What is the recommended approach before trading the strategy live?

It is highly recommended to test the strategy on a demo account for a month before trading live.

What is the significance of the 100 SMA in the trading strategy?

In the trading strategy, the 100 SMA is significant as it helps identify the market trend and can act as support or resistance. The price retracing to this level without closing below it is one of the conditions for entering a long trade.

What is the recommended risk per trade according to the script?

The script suggests risking 5% per trade for the goal of rapid account growth, although it is noted that typically it is advised not to risk more than 2% per position.