AI Won’t Help You Make Money from Trading, Says Nithin Kamath
In a recent LinkedIn post, Zerodha's Nithin Kamath explains why AI cannot guarantee profits in trading. While tools can reduce emotional decisions and improve discipline, real success still depends on behaviour, strategy, and realistic expectations in today’s efficient markets.
AI is now part of almost every conversation in finance. From stock picking tools to automated strategies, many retail investors are asking a simple question: Can AI help them make money from trading?
According to Nithin Kamath, the answer is far less exciting than many expect.
In a recent post, the founder and CEO of Zerodha said, “People keep asking me if AI can help them make money from trading. My honest answer is not really.”
Why AI Alone Won’t Create Profits
Kamath points to a basic truth about markets. Even with better tools, human behaviour does not change easily.
“As long as there's a human in the loop, you're still dealing with the same creature driven by fear and greed, and that human will keep making the same mistakes.”
This remains one of the biggest reasons why retail traders struggle. Emotional decisions, panic selling, and overtrading often hurt returns more than lack of information.
There is also another challenge. Markets today are highly efficient.
“There's no real informational edge left in markets. The odds are that everything is priced in. And even when it isn't, operating under that assumption is almost always a good idea.”
In simple terms, most publicly available information is already reflected in stock prices. This leaves very little room for easy gains.
Where the Real Edge Lies
Kamath highlights that consistent profits in trading are not coming from casual AI users or retail participants.
“The people actually making consistent money in markets are high-frequency trading firms, market makers, prop desks etc that have built infrastructural and data moats over years, with significant investment of time and capital.”
Globally, firms like Citadel Securities and Jane Street use advanced systems, deep data access, and strong infrastructure. These are not easy to replicate.
This shows a clear gap between institutional trading and retail participation.
So, What Can AI Actually Do for Traders?
While AI may not generate profits directly, Kamath believes it still has a useful role.
“It's a tool to help you behave better. Not to generate alpha.”
AI can support traders in practical ways:
- Backtesting strategies
- Automating execution
- Reducing emotional decisions
“What it can do is help you build and test strategies, then execute them systematically, removing emotion from the equation. That means fewer panic sells, less revenge trading, and more consistency.”
This is where AI becomes valuable. It improves discipline, not intelligence.
AI as a Tool for Discipline, Not Profit
Kamath makes a clear distinction that many miss.
“AI can make you more disciplined, but not smarter.”
For retail investors, this shift in thinking matters. Losses often come from poor behaviour rather than poor ideas.
AI can help reduce mistakes. But it cannot turn a weak strategy into a strong one.
The Future of AI in Stock Markets
The use of AI in trading will keep growing. Platforms are already adding AI-led insights, alerts, and automation tools. Even Zerodha has been investing in education and tools through initiatives like Rainmatter.
Looking ahead, AI may become a standard feature for traders. But the core challenge will remain the same: discipline, patience, and realistic expectations.
For now, Kamath’s message is simple and grounded. AI is not a shortcut to wealth. It is just another tool. How you use it will decide the outcome.
Muskaan Kapoor