ChatGPT and Forex Trading: The Broker Take - from Contentworks Agency

What does ChatGPT mean for forex brokers? Will they be able to offer traders better trading experiences via AI? As the leading marketing agency for the finance space, we're taking a deep dive.

LIMASSOL, Cyprus, April 24, 2023 /PRNewswire-PRWeb/ -- Launched by OpenAI on November 30, 2022, ChatGPT gained 1 million users within 5 days, reaching a whopping 1 billion visits to become "the fastest-growing platform" by February 2023. By March 14, 2023, OpenAI had launched the fourth version of its platform, ChatGPT4. This upgraded version can create both text and images or "art," making it smarter than the previous versions. What's more, with OpenAI's Whisper plugin, also launched in March, ChatGPT4 can offer real-time breaking news, stock prices and even sports scores.

So, what does ChatGPT mean for forex brokers? Will they be able to offer traders better trading experiences via AI? As the leading marketing agency for the finance space, we're taking a deep dive.

AI in Trading

We've already witnessed AI trading bots help with automated trading on platforms like MT4/5 and ZuluTrade. Now, with ChatGPT's data processing speed and ability to track real-time data, identifying market patterns and trends has become faster than with human processing. This means the potential to predict price movement faster and capitalise on market opportunities. It can also alert traders regarding potential risks, while offering advice on mitigating them.

Thanks to machine learning, the tool learns from trader behaviours over time, to fine-tune responses and offer more personalised recommendations. For example, if the trader has been searching for gold price, the AI bot begins to recommend opportunities to trade gold, such as via CFDs or ETFs. Apart from real-time market and news updates, ChatGPT can carry out market research on a specific industry or sector and offer comprehensive reports after analysing financial data. It can also help with technical and fundamental analysis, such as helping identify technical indicators and offering insights into a company's earnings report or financials.

"It is also believed that the AI platform could help traders with portfolio management by offering asset allocation recommendations and advice on investment strategies, based on their risk appetite and trading goals" says Sanmi Thompson, Founder and Head Trainer, Forex Trainer Online. Of course, it can also offer real-time support, just like any other chatbot.

ChatGPT for Brokers

The most talked-about AI innovation of the past years could offer brokers the means to boost conversion rates and trader activity on their platform through automated yet personalised emails, alerts and newsletters regarding market updates, insights on price trends and trading patterns. Conversational AI, such as ChatGPT, is already being used as a virtual assistant for traders, offering support and helping with market entry and exit decisions.

Natural Language Processing technology allows the virtual assistant to understand the questions being posed by traders and then offer relevant insights and information. These trading assistants can also analyse large data sets to offer personalised recommendations, based on an individual's trading preferences and history.

ChatGPT's ability to analyse data sets also means that brokers can use it for fraud detection and prevention. The platform can crawl through transaction data to identify suspicious patterns. Alerts can also be set up so that the security team can be notified of such activities immediately.

"ChatCPT can provide significant benefits to IT departments, particularly in the

challenging process of identifying errors that cause system crashes or failed features. The tool can quickly locate coding errors, generate, and document code, which helps save a lot of time." states Dora Christofi, Head of Digital Marketing, Orbex.

The Flip Side

In the heavily regulated world of forex trading, it's essential that we analyse the flip side. The technology is intriguing and exciting for some brokers but what do you need to be aware of?

• Relying on AI-powered tools exposes brokers to vulnerabilities inherent in the overdependence on any technology. For instance, just like any other technology, AI systems, like ChatGPT, have limited ability to adapt to any unexpected events that were not part of its training data.
• Google is also able to distinguish between AI and human content. The search giant has updated its ranking algorithm from EAT to EEAT, giving preference to human content.
• Another problem is the issue of overfitting. This is when an AI system relies on limited training data, which results in it being unable to perform when new data is applied. Overfitting for brokers could mean that the tool might provide poor trading recommendations.
• Accuracy of information becomes a major concern in the financial markets due to the risk of losses. Unfortunately, ChatGPT has been flagged for its inaccuracies in providing information. Firstly, it is sensitive to spelling errors, typos and grammatical mistakes. Secondly, a recent study found that "ChatGPT may also fabricate facts in order to provide a response."
• Research by the New Zealand Institute of Skills and Technology has revealed that AI models, like ChatGPT, could have political biases embedded in them. The researchers found that ChatGPT tended to manifest "a preference for left-leaning viewpoints." This brings into questions the ethics of using such models to provide clients market analyses and reports.
• The next issue with AI-generated content, including market reports, is that of plagiarism. It has been seen multiple times that when the same keywords or similar topics are given to an AI-driven tool, the content is almost identical. This means brokers using such tools would all be churning out the same information for their clients. Not only does this go against the need to differentiate the brand, it also presents a risk of plagiarism, which Google penalises severely for. It could also lead to copyright violations, landing brokerages in legal trouble.
• Security risks can be another problem. While it is designed to prevent users from accessing sensitive data when asked directly, the tool is easy to fool. For instance, Security Boulevard conducted an experiment, where ChatGPT was directly asked to share AWS credentials to an unauthorised user. ChatGPT fielded the request well by stating it wasn't authorised to share such credentials. The user then asked the tool to share examples of AWS credentials, which led to ChatGPT revealing multiple credentials.

If brokers really want to offer traders AI/ML-based tools that help with market predictions, there are some powerful solutions available today, such as those offered by Acuity Trading. Tools like ChatGPT are not equipped to make predictions and offer market outlooks that aid trading. A research paper by Seoul National University goes so far as to say, "ChatGPT is not a 'prophet' of the financial industry but rather an 'assistant' or 'co-pilot' to investors and portfolio managers."

"I am curious how ChatGPT will be permissioned for the financial industry. There are already restrictions on the free-use app. Where we see the likes of Bloomberg and others using ChatGPT-like applications, I can see some strong use cases that will require a sophisticated user to understand. For example, the application and use of raw sentiment data," says Andrew Lane, Founder and CEO, Acuity.

In fact, AI-driven tools, can only generate aggregated summaries from their data analyses, rather than provide opinions. So, even their investment recommendations are likely to be limited in applicability. According to one of China's largest brokers, China International Capital Corp Ltd. "ChatGPT can write a good market outlook report, but it does not have independent analysis skills" and "should not be directly used to guide investment decision."

The Marketing Take

From a marketing standpoint, thousands of tools and platforms launch each year. It's good to investigate their capabilities and understand where, and if indeed, they fit into different sectors. Regarding ChatGPT, our concerns lie predominantly in the compliance and regulation space with uncertainties about how information is sourced, credited and verified. So, whether brokers are attempting to attract clients with AI-generated content or market updates, they might bring losses for traders and also catching the eagle eyes of the regulatory watchdogs. Additionally, there is also the lack of strategy, tone of voice, branding, demographic targeting and an understanding of trader mindsets within different finance subsets.

Contentworks Agency works with leading banks, brokers and fintechs to deliver winning content like analysis, education and social media. Book a 15 minute Zoom with our team to discuss your content marketing strategy.

Media Contact

Charlotte Day, Contentworks Agency, 357 00000000, [email protected], www.contentworks.agency

SOURCE Contentworks Agency