Cryptocurrency trading can occur at any time, meaning there are ample opportunities for traders to take advantage of. However, no trader can be awake or watch trades at all times, which is why many crypto traders turn to bots, which automatically execute their trading strategies.
One of these traders is Rekt Fencer, a pseudonymous investor on X (previously Twitter) who said he made $70,000 using a trading bot powered by ChatGPT. In this article, we take a closer look at how he did this.
How Rekt Fencer Made His Crypto Trading Bot
Rekt Fencer claimed on X that he created his own cryptocurrency trading bot, which was assisted by ChatGPT. He developed this bot using the Bollinger Band indicator, which is known for being effective in assessing market trends. The technical indicator is used to measure market volatility in cryptocurrency.
What Rekt did was buy when the price went over the Bollinger Band and sell when it went below. It takes advantage of market volatility and predicts price movements based on previous statistics. Through his X account, he explained to users how his ChatGPT-assisted crypto trading bot worked. Here’s the process that Rekt followed:
- He adjusted the Bollinger Band settings on TradingView, which many traders use for technical and fundamental analysis.
- Then, he coded the bot by making several upgrades, including improving its adaptability to the changing market conditions.
- Then, he integrated the bot with ChatGPT to create a better trading algorithm.
- The next step was to duplicate the indicator’s source code, rename it, and upgrade it.
- Finally, he scripted the trading logic into the system.
He also shared the ChatGPT prompt on Twitter, which instructed the AI tool to automate the entries and exits. The prompt was, ‘Code strategy entries for this in pinescript v5. Enter a long when the price closes above the Bollinger band and a short when the price closes below the lower Bollinger band. Close the long when the short condition is met, and close the short when the long condition is met.’
Another important aspect of this process was to address coding errors. This can cause troubles in automated trading. So, Rekt advised that traders should use ChatGPT to diagnose and correct errors efficiently.
However, it’s essential to note that there are risks related to automatic trading. Rekt recommends that traders should start with smaller amounts to assess the effectiveness of their strategy before upping the stakes. Risk management is critical in automated trading. Traders must also connect their crypto trading platform with a tool like TradingView to replicate Rekt’s process.
ChatGPT for Trading
ChatGPT can be used as a tool to assist in trading decisions. Traders can use it for advanced risk management and develop an algo trading strategy. The AI tool can also be used to evaluate your trading strategy, including portfolio analysis, trading strategy comparison, and risk performance analysis. Further, it can assist in selecting a trading strategy, giving you insight into different trading techniques.
Benefits of Crypto Trading Bots
There are different benefits of using cryptocurrency trading bots. Trading bots are highly efficient in automating the trading process, helping traders monitor their digital assets and observe various markets at the same time. Plus, they don’t have to do it manually.
Crypto trading can also help you trade all the time and take advantage of the volatile crypto market. Since traders can’t monitor the market round-the-clock, trading bots ensure they don’t miss out on opportunities. You can also set the correct parameters so that your crypto trading bots improve trading accuracy and market timing.
With crypto trading bots, no human emotions are involved in the trading process, so there will be fewer mistakes. Traders are often emotional when making decisions due to fear or greed, which can affect the outcome.
Risks of Crypto Trading Bots
There are some downsides to using cryptocurrency trading bots. For one, your computer must constantly run for the trading bot to run. So, if the bot fails to execute or the computer goes off, you won’t make any trades.
You need technical knowledge to set up a trading bot, which includes trading strategies, the crypto market, and programming. The volatile nature of cryptocurrencies means you have to change the strategy often. You also need coding skills to create bots; if you don’t know how to code or program for this kind of use case, you can’t create a trading bot.
Automated cryptocurrency trading bots have direct access to your assets, so there’s a chance of getting scammed. If a hacker adds a malicious code to your crypto trading bot, they can withdraw all your funds. So, do the due diligence and be careful when using your bots.
Taking Advantage of Trading Bots in Crypto Trading
AI-driven trading bots like the ChatGPT-assisted trading bot made by Rekt Fencer offer promising crypto opportunities. However, you still need detailed information on the technology and crypto market principles. As you go on, it’s essential to enhance your strategy as your trading grows. Another important factor to keep in mind is that, although you are relying on the trading bot, you should still keep an eye on your trades, carefully plan your strategy, and rigorously manage your risks.