Is Algorithmic Trading Profitable for Average Investors?

A graphic of a bag of money sitting in front of a desktop depicting a candlestick chart representing the use of algorithm's in modern trading.


Algorithmic trading uses quantitative engines to craft investment strategies based on recognizable market patterns and has become notably popular over the last several years. In fact, more than 60% of all trades conducted since 2016 were executed through some kind of algorithmic engine.

This answers whether or not algorithmic trading is accessible, but that still leaves questions about strategic effectiveness and overall profitability unanswered. For this reason, many new investors seek answers to those questions before getting started.

Today, we will answer the question, “is algorithmic trading profitable?” We will show how a quantitative approach routinely outperforms traditional models. To do so, we will:

    • Compare the average returns of algorithmic trading platforms against traditional approaches to investing. 
    • Explain the mechanics of algorithmic trading to illustrate why it routinely outperforms other approaches.
    • Finally, we offer a few suggestions for new investors looking to get started.

Is Algorithmic Trading Profitable Compared to the Traditional Model?

Whereas algorithmic trading relies on quantitative engines and artificial intelligence (AI), traditional investing has been the status quo for as long as there has been a stock market. Traditional investing relies on human intelligence and, more importantly, experience to craft investment strategies and execute trades. 

Despite the extensive wealth of experience this approach has, algorithmic trading routinely outperforms traditional investing by 2 to 3 times. The table below outlines the average returns for both algorithmic and traditional investing:

 Algorithmic  Traditional
20-30% 5-10%


For context, one should note that 5 to 10% for traditional investors is considered very good and is often only achieved by experienced professionals with a better sense of what they’re doing. For new investors, it is much more likely that you will make less or potentially even have negative returns for your first several years while you are still learning the ropes. This area, in particular, is where the algorithmic approach to investing offers significant gains over traditional models.

Why Does it Work?

Algorithmic trading relies on machine learning. In short, quantitative scientists feed a primitive AI with decades of market data, which it uses to recognize patterns. From those patterns, the AI creates algorithms, which are simple rules to execute or follow in the event that a pattern is identified. This forms the basis of an algorithmic investment strategy.  

The use of machine learning provides algorithmic trading with several distinct advantages that traditional models simply do not have access to. These include:

    • Improved Market Knowledge: Developing a nuanced understanding of global markets takes years of study and learned experience, which do not come easy for most people. Algorithmic trading platforms, on the other hand, provide this experience for you immediately. This gives investors strategy options that they may not even have been familiar with on their own.
    • Unlimited Endurance: Unlike human beings, algorithmic trading engines do not need to sleep, eat, or take breaks. They are relentless in monitoring markets for potential changes and, in most cases, can be set to adjust your portfolio automatically should a potential problem arise. This ensures that investors don’t miss out on potential trades or accidentally tank their portfolio because they need to sleep.
    • Automated Adjustments: So what happens when a quantitative trading platform runs into new market phenomena? Well, the answer is that investors get algorithmic adjustments created by the best quantitative scientists in the market. This ensures loss mitigation and potentially even unexpected profit in the face of unpredicted market behavior, which would not be available in a traditional investment approach.

Because of these advantages, algorithmic trading approaches have been used to maximize profits across various platforms. On the lower end, robo-advisors have become the new investment trend for hands-off investors and new investors looking for an accessible entry into investing. On the higher end, mutual funds and even hedge funds have turned to quantitative models to craft high-risk strategies that generate greater returns.

Is Algorithmic Trading Profitable For You? 

For all of the exceptional advantages algorithmic trading provides over traditional investing, the biggest thing it lacks is a developed understanding of who you are as an investor. The modern investor comes from all different classes and backgrounds, leading to a wide variety of financial situations that need to be understood and taken into account when developing a financial investment strategy. Although most online robo-advisors claim to offer strategy options to meet your individual risk tolerance, these options are rarely tailored to the investor. They are instead presented as cookie-cutter high-risk, low-risk options.

So, is algorithmic trading profitable for you? Well, the answer is it can be, provided you select the right investment platform. Here at RIMAR Capital, we offer investors a hybrid approach to investing, combining the best of algorithmic trading with experienced financial advisors to craft winning strategies that respect your individual circumstances while striving for the greatest possible profit.

Getting Started With Rimar

RIMAR Capital makes artificial intelligence-based investing broadly accessible to everyday investors who don’t fit the profile of a typical hedge fund client. With RIMAR, investors have the choice of several different trading strategies, all of which are backed by some of the industry’s leading experts. What’s more, RIMAR investors don’t need millions in assets to invest, nor are they subject to a battery of fees and prohibitions on when and how they can access their own money. So if you’re ready to pick up returns that are only possible with data-driven mastery of the market, RIMAR Capital is right up your alley.

So, Is algorithmic trading profitable? At Rimar, it is. Contact us today and see how we can help grow your portfolio’s value with hedge fund-like returns earned using its AI-driven investing strategies and skilled quantitative trading staff.

Ryan Gordon

Ryan Gordon

Ryan is a qualified chartered accountant of South Africa. Ryan is an avid sportsman who also enjoys reading and spending time with friends and family in his down time. Ryan joined the RIMAR Capital team in 2019 as a business development manager.

Contact us today!

In a world where milliseconds matter for margins, you need to evaluate and act instantly.

RIMAR’s artificial intelligence investing platform combines quantitative models, artificial intelligence, and powerful machine learning to reduce risk, eliminate bias, and make the complex more simple. Act smarter and faster. Get real returns.

RIMAR Capital brings you world-class multi-strategy asset management by offering diversified investing strategies targeted to out-perform the benchmark in a variety of market conditions, while reducing volatility and costs for the investor.

We’re ready to start growing your wealth when you are, so contact our team today!

Related Posts