NEW Chat GPT-4 Trading Strategy Turned $100 to $7313!
Summary
TLDRThis 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
- đ The script introduces an advanced trading strategy designed to grow a small trading account quickly.
- đĄ The strategy utilizes three indicators: Money Flow Index, Smooth Moving Average (SMA), and Engulfing Candle pattern.
- đš The Money Flow Index is adjusted for better visibility with color changes in the chart settings.
- đ The Smooth Moving Average (SMA) with a period of 100 is used to identify market trends and act as support or resistance.
- đ Engulfing candle patterns signal potential trend reversals, with bullish patterns indicating a likely price rise and bearish patterns suggesting a likely price fall.
- â The refined strategy includes specific rules for entering long and short positions, focusing on trend identification, price retracement, and overbought/oversold conditions.
- đ 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.
- đ 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.
- đč 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.
- â ïž 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.
Outlines
đ Advanced Trading Strategy with GPT 40
The speaker discusses their experience with the GPT 40 model, which they used to create an advanced trading strategy aimed at rapidly growing a small trading account. They mention that the initial response from the model was better than expected, but required some personal adjustments. The strategy involves three indicators: the Money Flow Index (MFI), the Smooth Moving Average (SMA) set to 100 periods, and the Engulfing Candle indicator. The speaker provides a solution for using more than two indicators on TradingView's free version. They explain how to adjust the chart settings for better visibility and detail the functions of each indicator. The Money Flow Index measures buying and selling pressure, the SMA identifies market trends and potential support/resistance levels, and the Engulfing Candle indicator signals potential trend reversals. The speaker then outlines the refined rules for entering long trades based on these indicators, emphasizing the importance of market trend, price retracement, Money Flow Index conditions, and engulfing candle patterns. They also discuss risk management strategies, such as setting stop losses and adjusting them as the trade progresses.
đ Implementing a Short Position Strategy
In the second paragraph, the speaker focuses on the strategy for taking short positions. They explain how to identify a bearish trend using the SMA and Money Flow Index, and the importance of waiting for a price retracement and an overbought condition before looking for a bearish engulfing candlestick pattern. The speaker emphasizes that all conditions must be met before entering a short trade. They also discuss the placement of stop losses and profit targets, suggesting adjustments once half the profit is made to ensure a break-even scenario. The speaker then shares backtesting results, indicating an 85% win ratio and a maximum drawdown of 2.5%, while cautioning that the higher risk per trade may not be suitable for all traders. They recommend testing the strategy on a demo account before going live. The paragraph concludes with an invitation to join a crypto community and a reminder to check out a playlist for more high win-rate strategies.
Mindmap
Keywords
đĄGPT 40
đĄTrading Strategy
đĄMoney Flow Index (MFI)
đĄSmooth Moving Average (SMA)
đĄEngulfing Candle
đĄOverbought/Oversold
đĄSupport and Resistance
đĄRisk Management
đĄBacktesting
đĄDemo Account
đĄRisk-Reward Ratio
Highlights
Introduction of the GPT 40 model and its potential for creating advanced trading strategies.
The strategy uses three indicators: Money Flow Index, Smooth Moving Average (SMA), and Engulfing Candle indicator.
Recommendation to change plot colors for better visibility on the chart.
Explanation of the Money Flow Index and its role in identifying overbought or oversold conditions.
Addition of the Smooth Moving Average (SMA) set to 100 periods to identify market trends.
Description of the Engulfing Candle indicator and its significance in trend reversal signals.
Refined rules for a long trade, including market uptrend, price retracement, and Money Flow Index conditions.
Use of the SMA for support and resistance in addition to trend identification.
Strategy for entering a long trade with specific conditions met and risk management techniques.
Example of a long trade entry with price finding support at the 100 SMA and a bullish engulfing pattern.
Refined rules for a short trade, including bearish trend identification and Money Flow Index conditions.
Strategy for entering a short trade with specific retracement and engulfing candle pattern conditions.
Backtesting results showing an 85% win ratio and a risk-reward ratio of 1:2.
Recommendation to test the strategy on a demo account before live trading.
Invitation to join a crypto community for knowledge and tools to achieve financial goals.
Promotion of zero fees on spot trading for the first 30 days and deposit rewards up to 30,000 USDT.
Encouragement to try the strategy and explore high win rate strategies through linked resources.
Transcripts
nowadays there is a hype going on for
New chat GPT model known as the GPT 40
so I had an early access and I asked it
to create an advanced trading strategy
with the same goal growing a small
trading account fast and of course
nothing is perfect so I had to put my
own twist on it let's dive in and see
what chat gbt has to offer honestly the
response was better than I expected but
we still need to tweak the strategy a
bit this strategy uses three indicators
so let's add them to the Chart I know
you may say the free version of trading
view only lets us to use two indicators
at the same time well fear not I have a
solution for you just before the end of
the video so make sure to watch it until
the end first up is the money flow index
there are many options out there but I
recommend this one by dreams find before
we dive into how it works let's change
the colors of the lines for better
visibility open the style settings and
change the plot color from black to
[Music]
white and make the background a bit more
visible
[Music]
too 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 the index ranges from 0 to
100 with readings above 80 indicating
overbought conditions and readings below
20 indicating oversold conditions next
we add the smooth moving average SMA set
to 100
[Music]
periods unlike the simple moving average
which gives equal weight to each price
point the smooth moving average assigns
more weight to the most recent prices
this results in a smoother line on the
chart reacting more slowly to sudden
price changes it helps identify market
trends and can act as support or
resistance for example if the price is
above this Ma and the line is sloping
upward the trend is
bullish conversely if the price is below
this Ma and the line slopes
downward the trend is bearish lastly we
add the engulfing candle
indicator an engulfing candle pattern
indicates a potential trend revers
[Music]
a bullish engulfing pattern happens when
a small red candle is followed by a
larger green candle suggesting the price
is likely to rise a bearish engulfing
pattern occurs when a small green candle
is followed by a larger red candle
suggesting the price is likely to fall
the indicator prints green and red
triangles to highlight these
patterns so what are the rules for this
track strategy and how can we improve it
chat gbt suggests that we first identify
the trend if the price closes above the
SMA the trend is bullish and we only
take long
positions then we look for an engulfing
candle pattern to enter the
market finally to confirm a long entry
the money flow index must be above 50
indicating positive sentiment I reviewed
some signals from this strategy but many
could result in losses to fix this we
need to refine the entry conditions we
won't use the money flow index in a
basic way instead we'll look at
overbought and oversold conditions more
closely we'll also use the SMA not just
to spot Trends but also to find support
and resistance here are the refined
rules for a long trade the market must
be in an uptrend the price must retrace
to this Ma and the candle must not close
below
it the money flow index must be oversold
confirmed by a green circle
[Music]
a bullish engulfing candle must form by
the time the money flow index leaves the
oversold
Zone if all conditions are met open a
long trade at the close of the
confirming
candle place the stop loss below the
swing low and Target twice the
[Music]
risk once you've made half the profit
move the stop loss to break even
[Music]
here's an example watch how the price
finds support at the 100
SMA the selling pressure decreases as
the candlesticks approach the
line during the retracement the money
flow index becomes oversold and then a
bullish engulfing pattern appears
[Music]
[Music]
now for taking a short position identify
a bearish trend with the price closing
below the SMA wait for the price to
retrace to the SMA and the money flow
index to become
overbought look for a bearish engulfing
Candlestick pattern enter a short trade
only if all conditions are
[Music]
met place the stop loss above the swing
High and Target twice the
[Music]
risk adjust the stop loss to break even
once half the profit is
[Music]
made all right Traders you now have a
full understanding of the strategy let's
move on to the back testing results I
tested this strategy on different Forex
and crypto pairs using 1 minute to 1
hour time frame and the results were in
same starting with a $100 account and
risking 5% per trade I was able to get
these amazing
results the win ratio was 85% which is
high for a risk reward ratio of 1 two
and the maximum draw down was only 2.5%
keep in mind risking 5% per trade is
higher than usual typically it's advised
not to risk more than 2% per position
but since our goal was rapid account
growth this higher risk R portray was
appropriate even though the strategy
showed great results in back testing I
highly recommend testing it on a demo
account for a month before trading live
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want to learn more High win rate
strategies check out the playlist linked
right here happy Trading
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