When you think about using ChatGPT for forex, you probably think mostly about how you can use it for educational purposes, to help you plan trades, or to analyze data. But did you know that it may also be useful for improving your trader psychology? In this post, we take a look at how you can use ChatGPT to hone this critical aspect of your trading.
1. Identify patterns in your behaviors and emotions.
Do you keep a daily log of some sort about your trading? If so, do you include qualitative notes about your choices, justifications for entering and exiting trades, and emotions?
Not every forex trader tracks this kind of data. But every forex trader should. Oftentimes, the reason we win or lose a trade is not ultimately because our system was inefficient or a setup was “bad.” Here are some other reasons we may lose trades:
• Our interpretation of a potential setup was not optimal.
• We allowed our emotions to steer us into a trade.
• We let our emotions steer us out of a trade.
• We were not feeling our best physically, or we were distracted mentally.
• Etc.
Information about these issues is not captured adequately or at all if the most you do is record a win or a loss, the amount, and a quick description of a trade setup.
Instead, we suggest you also record data like:
• How the trade setup “rated” overall, and why.
• How you were feeling when you placed the trade.
• How you were feeling when you got out of the trade.
• Anything significant that springs to mind regarding the trade or your state of mind.
If you copy and paste these types of daily trading logs into ChatGPT, you can then ask the AI something like this:
• “Can you analyze the data I just uploaded, and tell me if you spot any patterns in my trade decisions for trades that I lost?”
ChatGPT may come back with something you would have missed on your own. For example, it could spot that 30% of your losses for this time period happened on days you had headaches or forgot to eat breakfast. Or, it might note that for half of the trades you lost, you debated whether to exit early or not for a long time. Or, it could note that you were feeling a large amount of anxiety on many days you lost trades.
At that point, you would be able to hypothesize some things about which behaviors lead to losses, and the factors that contribute to those behaviors, physically and psychologically.
2. Spot cognitive distortions in your thinking.
If you provide ChatGPT with detailed logs as we discussed above, it may also sometimes be able to draw your attention to cognitive distortions. It may pick up on these during your conversations with it as well.
For example, it might notice that you anthropomorphize the market a lot in your daily logs, writing things like “the market was really out to get me today,” or “I was trying to get back at the market.” It could bring this up to you, reminding you that you tend to ascribe human motivations to the market, and that this influences your trading decisions in a negative way.
As another example, maybe you have been trading with a method that is not really panning out. While talking with ChatGPT, you say something like, “Well, I have poured too much time and effort into this already to just give up and move on.” ChatGPT may recognize this as an example of the sunk cost fallacy, and let you know.
3. Talk things out and get a fresh perspective.
Along with asking ChatGPT to analyze your log entries to spot trends in your thoughts, emotions and behaviors, you can also simply talk things out with it.
Before the days of AI chatbots, if you wanted to bounce your thoughts off of someone, your only options were other traders, friends, family or co-workers, or yourself.
Each of these posed potential inconveniences. You might not know any other forex traders, and your family, friends and co-workers might not have a lot of valuable input. They could also just not relate, or be tired of hearing about trading. As for talking to yourself, well, that can be very useful, but you are still essentially stuck inside your own head.
ChatGPT is always available and ready to listen while you talk about forex. You can:
• Discuss your trading day and how things went, sharing your wins and losses.
• Tell it about any issues with trading that are frustrating you.
• Ask it for recommendations and advice after you describe difficulties you are having or strategies you are considering.
ChatGPT can ask you questions or challenge your assumptions in ways that would be difficult for you to do on your own, or that people in your life might never even think of. In doing so, it can bring fresh perspective to your trading and offer you new ways of working through your difficulties.
4. Talk with ChatGPT when you have a lot on your mind and need to vent.
Sometimes, you are not even necessarily looking for fresh perspective, ideas or solutions regarding your trading; you just have something you want to get off your chest.
Talking to ChatGPT gives you a chance to clear your head. You can complain about your losses without it getting fatigued with you, and listen to your fears and anxieties without invalidating them. Sometimes this is all it takes to cool down from a heightened emotional state and get back to trading feeling more level.
Before you get started, you could even ask ChatGPT to roleplay with you, pretending it is your forex trading mentor or friend.
It may feel strange to say, but a lot of people get a sense of emotional support from chatbots. Perhaps they give us an indirect way of connecting with our own sense of compassion for ourselves.
Conclusion
ChatGPT is a powerful tool for forex traders, and it can be a big help with honing your trading psychology. You can use it to explore your patterns of thought, emotion and behavior, to refresh your ways of thinking through problems, and simply as a sounding board or emotional support when you need one. All of these advantages can combine to make you a more effective forex trader. Continue exploring our recent posts to learn more about using AI for trading.
