Cryptocurrency trading bots have been around almost as long as the crypto market itself. These bots create automated trading strategies to execute buy and sell orders for traders. Bot trading has proven to save time and even generate large profits. However, most trading bots come under paid subscriptions, and sometimes, their level of customization is not enough for users.
If you don’t want to use a pre-made trading bot, you can choose to conceptualize and design one yourself. With the renowned language model ChatGPT, you can create your own custom trading bot from scratch. Today, we’ll explore the possibilities for using ChatGPT for training and provide a step-by-step guide to help get you started. Let’s dive in!
Can I Use ChatGPT as a Crypto Trading Bot?
Although you can’t use ChatGPT as a trading bot, you can use it to create one. Yes, with just a prompt and predefined strategy, ChatGPT can design a bot that can make trading decisions aligned with your goals and preferences.
What to Be Aware of Before Using ChatGPT for Trading
You may come across some articles, posts, and videos that claim using ChatGPT for crypto trading will lead to massive profits with little to no effort. Although this is possible, it’s important to understand the language model’s limitations.
For instance, creating your own trading bot can be extremely complex, even with the help of ChatGPT. In most cases, you will need additional programming skills and an understanding of APIs to successfully integrate and utilize your bot.
Furthermore, this technology, despite being highly advanced, has limited financial expertise. Similarly, it may struggle to account for unexpected market behavior, which can affect the bot’s performance.
Therefore, you should know that ChatGPT is not guaranteed to make you a profit, and you may be left with losses instead. To truly use this technology to your advantage, you will need to spend time monitoring and configuring your bot. Many traders cannot dedicate that much time to a trading bot, which is why this option is not suitable for everyone.
How To Build a Crypto Trading Bot With ChatGPT
Still interested in creating your own trading bot with ChatGPT? Here’s a step-by-step guide that will walk you through the entire process:
1) Create an OpenAI Account
Firstly, you’ll need to head to chat.openai.com to create an OpenAI account. This requires you to register and verify your phone number. You’ll then have access to ChatGPT.
2) Write a Prompt
The next, most important step is to create a suitable prompt. With ChatGPT, the more detailed your prompt is, the better. You’ll probably need a few tries to write a fleshed-out prompt that meets your trading bot requirements. Your prompt will also depend on whichever trading strategy you want your bot to employ. Here are two examples of bot trading prompts for ChatGPT to help get you started:
- Basic Trading Bot – “Create a bot that trades cryptocurrencies. Implement a 2% stop-loss with a 100-day moving average crossover strategy. Aim to make a short-term profit.”
- Arbitrage Bot – “Design a trading bot that focuses on arbitrage opportunities. Monitor price differences between crypto exchanges, considering transaction costs and market liquidity.”
You can spend some time tweaking these prompts to fit your needs. Just make sure you include some risk mitigation measures to avoid large losses or other undesired outcomes.
3) Integrate the Bot With a Trading Platform
After you’ve landed on a prompt you’re happy with, input it into ChatGPT for the language model to create code for your trading bot. Next, you will need to connect this code to a crypto exchange’s API. This is where things can get complicated, so make sure to take your time. Connecting with a trading platform’s API allows your bot to execute trades.
4) Test and Refine Bot Performance
Once you’ve got your bot up and running, it’s time for you to monitor its performance. Honestly, at this point, you can expect a few issues to arise. Don’t worry, though, as that’s just part of the testing process. Once you pinpoint any problems, you can head back to ChatGPT to alter the bot and refine its performance. This will take some back and forth, but it can all be worth it in the end!
Alternative Options
Although you can use ChatGPT for crypto trading, it’s not necessarily the best option. If you’re a trader looking to simplify the process and make trading more efficient, then you may be seeking an alternative. Luckily for you, we have two fantastic ones:
Standard Trading Bots
For using a tool that has been specifically designed to trade crypto on your behalf, you can’t do much better than standard trading bots. Unlike ChatGPT, these bots are created to analyze market movements, follow predetermined conditions, and utilize advanced trading strategies. Trading bots also:
- Have a split-second reaction to price fluctuations;
- Can analyze huge amounts of market data at once;
- Are able to make trades 24/7 without human intervention;
- Can execute complex trading strategies;
- Do not require any coding knowledge.
Many trading bots are under a premium subscription, but some are free-to-use. However, unpaid bots tend to lack quality-of-life features and other helpful additions. That’s why we suggest using a paid one to truly make the most of automated trading.
One of the best crypto trading bots in the market is 3Commas. With multiple subscription tiers and a wide range of advanced features, this bot can elevate your trading experience and even help you make a profit. All three tiers provide grid bots, DCA bots, backtesting capabilities, multiple-target selling, trading signals, multiple pairs trading, and copy bots. This gives you plenty of ways to configure your bot.
The 3Commas trading bot can connect with 16 crypto exchanges and is available on desktop and mobile devices. If you want to test out this bot at a low cost, then you can try the ‘beginner’ plan, which is just €3 per month. This plan grants you 10 active smart trades, 5 running single-pair DCA bots, and 25 active deals. Trying this bot rather than using ChatGPT may prove to be more straightforward and effective.
Crypto Brokerages
Although trading bots are a terrific tool to help save you time when you trade, they do have some flaws. One of the biggest drawbacks of standard trading bots is that they typically require some form of prior experience or knowledge. Yes, some bot providers do have available templates for their users. However, without technical knowledge or market insight, you won’t truly understand the success or failure behind your template.
Imagine you utilise a template that’s widely popular among trading bot users. Many others have managed to make a quick profit from this template, whereas you are only seeing losses.
Why is that? Well, if you’re a beginner trader, you probably won’t know. Instead, you’ll be guessing and making uninformed decisions that could make matters even worse. A tool that was supposed to streamline the trading process is now just spinning you in circles. This might not happen to you, but it’s a possibility, especially if it’s your first time trading.
So what’s the alternative? Let us introduce you to crypto brokerages. Brokers are a go-to option for anyone who is thinking of entering the crypto market for the first time or with little prior experience.
Rather than leave you to your own devices, a broker will stand by and assist you every step of the way. They provide various tools and resources to help you excel as a trader. Some brokerages even offer their own trading bots that they can show you how to use properly.
Finding a Brokerage
The hardest part about using a brokerage is finding one that’s compatible with your needs and goals. That’s why we suggest turning towards crypto broker matching platforms. A great example is Bitcoin iFex 360 AI which uses artificial intelligence to analyse your data and make an optimal match.
Before you know it, you’ll be in contact with a well-rounded broker who will help to transform your trading experience. From there, you can decide whether or not to use a trading bot. You could also discuss with your broker the possibility of using ChatGPT in your trading strategy. They will give you plenty more insight into the advantages and limitations of this tool in the crypto world.
Recap
Using ChatGPT for trading cryptocurrency can be a transformative experience. However, this tool will definitely not benefit everyone. This language model is not designed for trading and may lead to more losses than profits, especially for inexperienced crypto traders.
However, if you do believe using ChatGPT to create a trading bot can be beneficial, all you need to do is follow our step-by-step guide. Make sure to leave plenty of time to backtest, monitor, and alter your bot, as you’re unlikely to strike gold straight away. Creating a successful and profitable bot will take time and require a lot of patience.
Thankfully, if this seems too complicated and time-consuming, you still have some other effective alternatives. Both standard trading bots and crypto brokers can help you along the way as you embark on your journey into the cryptocurrency market. Automated crypto trading is definitely here to stay and can undeniably revolutionise the markets over the coming years.
