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.

Outlines

00:00

📈 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.

05:00

📉 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.

Keywords

💡GPT 40

GPT 40 refers to a hypothetical advanced version of the GPT (Generative Pre-trained Transformer) model, which is a type of AI language model. In the context of the video, it is mentioned as a tool used to create an advanced trading strategy. The term is used to illustrate the cutting-edge technology being leveraged to develop the strategy, suggesting that the approach is innovative and data-driven.

💡Trading Strategy

A trading strategy is a plan that outlines when and how to enter and exit trades for profit. In the video, the creation of an advanced trading strategy is the central theme. The strategy is designed to grow a small trading account quickly, which is a common goal among traders. The video provides insights into how the strategy was developed and refined, making it a key concept for understanding the video's content.

💡Money Flow Index (MFI)

The Money Flow Index is a technical analysis oscillator used to measure buying and selling pressure in a market. It combines price and volume data to identify overbought or oversold conditions. In the video, MFI is one of the three indicators used in the trading strategy, with readings above 80 indicating overbought conditions and below 20 indicating oversold conditions. The script mentions changing the plot color for better visibility, showing its practical application in the strategy.

💡Smooth Moving Average (SMA)

The Smooth Moving Average is a widely used indicator in technical analysis that smooths out price data to create a constantly updated average. Unlike the simple moving average, it assigns more weight to recent prices, resulting in a smoother line. In the video, a 100-period SMA is added to identify market trends and act as support or resistance levels. It plays a crucial role in determining the trend and entry points for trades in the strategy.

💡Engulfing Candle

An engulfing candle pattern is a type of candlestick pattern that signals a potential trend reversal. It occurs when a small candle is followed by a larger candle of the opposite color, indicating a change in momentum. In the video, the engulfing candle indicator is used to confirm entry points in the trading strategy, with green and red triangles highlighting bullish and bearish patterns, respectively.

💡Overbought/Oversold

Overbought and oversold are terms used in technical analysis to describe a security's price being too high or too low relative to its value. In the video, these conditions are identified using the Money Flow Index to determine when to enter or exit trades. The script mentions refining the strategy to look at these conditions more closely, indicating their importance in the trading strategy.

💡Support and Resistance

Support and resistance are levels on a price chart where the price of an asset tends to stop and reverse. In the video, the 100-period SMA is used to identify these levels, which can act as a guide for potential entry and exit points in the trading strategy. The concept is integral to understanding how the strategy uses technical analysis to make trading decisions.

💡Risk Management

Risk management in trading involves the process of identifying, analyzing, and accepting or mitigating uncertainties in investment decisions. The video discusses setting stop losses and target profits as part of the trading strategy, which are key risk management tools. The strategy aims for a high win ratio and a favorable risk-reward ratio, highlighting the importance of managing risk for successful trading.

💡Backtesting

Backtesting is the process of testing a trading strategy on historical data to evaluate its potential performance. In the video, the strategy is backtested on various Forex and crypto pairs across different time frames. The results, including win ratio and maximum drawdown, are presented to demonstrate the strategy's effectiveness before live trading. Backtesting is a critical step in validating the strategy's reliability.

💡Demo Account

A demo account is a practice trading account that simulates real trading conditions without risking actual capital. The video recommends testing the trading strategy on a demo account for a month before going live. This is a prudent step that allows traders to familiarize themselves with the strategy and its mechanics without financial risk, ensuring they are comfortable and confident before committing real money.

💡Risk-Reward Ratio

The risk-reward ratio is a fundamental concept in trading that compares the potential risk of a trade to its potential reward. In the video, the strategy is described as having a high win ratio and a risk-reward ratio of 1:2, meaning for every unit of risk, there is the potential for two units of reward. This ratio is a key consideration in evaluating the attractiveness of a trading strategy.

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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