How can AI tools like ChatGPT help crypto traders, and are they better than current bots?

Artificial intelligence (AI) tool ChatGPT, developed by OpenAI, has only been around for a few months, but it has managed to turn the world upside down. Its influence can be compared to the appearance of the internet or the launch of Bitcoin (BTC).

ChatGPT is developed as a language model leveraging natural language processing (NLP) technology. It has many use cases in language and content-based tasks and analytics, but it can also be used by cryptocurrency traders in several ways. Given its ability to analyze data and write code, ChatGPT can be used as the underlying technology for specialized crypto trading bots.

For example, users can ask ChatGPT to create code for crypto trading bots that could automate the trading process based on predefined parameters. Nevertheless, the resulting bots should be taken with a grain of salt and tested first.

Besides active trading, the AI tool can also be used to assess risk, which has already been tested by Coinbase. During a recent experiment, the United States-based exchange tested ChatGPT’s capability to monitor the risks of ERC-20 tokens prior to their listing. The company then compared the final results with the risk assessment of its blockchain security team, which uses in-house automation tools. While the results were promising, ChatGPT still has to evolve in order to compete with specialized teams. Coinbase said:

“We compared 20 random smart contract risk scores between ChatGPT and our automated security review leveraging internal tools. ChatGPT produced the same result as our reviews 12 times. However, of the eight misses, five of them were cases where ChatGPT incorrectly labeled a high-risk asset as low risk, which is the worst-case failure; underestimating a risk score is far more detrimental than overestimating.”

Can ChatGPT bots replace specialized crypto trading bots?

Given the unprecedented capabilities of OpenAI’s tool, the question is: Can ChatGPT-based bots replace specialized automated cryptocurrency trading tools? For example, TradeSanta offers a powerful in-house trading bot and lets users build customized bot-based tools and implement algorithmic strategies to get the best out of the crypto market.

TradeSanta is a cloud-based software platform that can automate trading strategies for better efficiency. It has a user-friendly interface and multiple features to help users execute trading strategies across major crypto exchanges while eliminating the psychological factor.

What’s more, TradeSanta offers a range of capabilities, including spot and futures trading, long and short trading options, risk management tools, and customizable bot templates. These specialized tools provide advanced functionalities, real-time data processing and the ability to execute complex trading strategies that are currently impossible to achieve with an AI tool like ChatGPT. What’s more, TradeSanta bots are still operated by humans, giving the tools the much-needed in-depth knowledge and ability to follow and learn from current events. Additionally, individuals who are complete novices may require assistance in articulating their desired strategy in the prompt. Without clear and detailed descriptions, the resulting strategy is likely to be inefficient. Meanwhile, TradeSanta provides users with useful guides and support.

Source: TradeSanta

Despite its potential, it’s early to say that ChatGPT-based bots can replace dedicated trading tools like TradeSanta. To begin with, ChatGPT has a limitation that doesn’t allow it to leverage data after September 2021, meaning that it cannot provide up-to-date analysis on crypto assets. However, if OpenAI were to lift this limitation, ChatGPT would still lack the human-like perception needed to understand the depths of the cryptocurrency space and the nuances of crypto trading.

As of today, ChatGPT cannot anticipate market events that could impact trading behavior. In addition, trading features and tasks, such as order execution, risk management, and real-time data processing offered by specialized trading platforms and traditional bots are more advanced than ChatGPT-based bots.

Consequently, the verdict would be that ChatGPT has a lot of potential and can, in theory, exceed many dedicated trading tools in the coming years, but it’s too early to say that it can replace them altogether.

Most importantly, ChatGPT lacks the depth of understanding and advanced features required to compete with dedicated trading platforms like TradeSanta. However, it’s interesting to see how ChatGPT and other AI models are evolving and how they can help the crypto community in the future.