In a recent LinkedIn post, Nithin Kamath, founder of Zerodha, addresses the persistent question of whether Artificial Intelligence (AI) can be a reliable path to making money in trading. His candid assessment suggests that for the average individual investor, the answer is largely negative, emphasizing that AI is unlikely to be the shortcut to trading profits many hope for.
Kamath’s core argument centers on the enduring influence of human psychology in trading decisions. He points out that even with AI assistance, the presence of a human operator means that emotions like fear and greed will continue to drive decision-making, leading to predictable errors. As Nithin Kamath notes:
“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.”
The Myth of Informational Edge
Beyond psychological pitfalls, Nithin Kamath highlights a more fundamental challenge in modern markets: the diminishing informational edge. He posits that in today’s highly efficient markets, most available information is already reflected in asset prices. While acknowledging that exceptions exist, Kamath advises operating under the assumption that markets are largely efficient.
Who Actually Makes Money in Markets?
According to Nithin Kamath, the entities consistently profiting from trading are typically those with significant structural advantages. He identifies high-frequency trading firms, market makers, and proprietary trading desks as examples. These players, he explains, have cultivated “infrastructural and data moats over years, with significant investment of time and capital.” These are the true edges in the market, he argues, not easily replicable by individual traders using AI.
“Those are real edges.”
The True Role of AI in Trading
While dismissing AI as a direct profit-generating tool for trading, Nithin Kamath does see a valuable role for it as an assistive technology. He suggests that AI’s strength lies in its ability to help traders improve their behavior and execution rather than generate new profit opportunities (alpha).
AI as a Tool for Discipline
Kamath argues that AI can be instrumental in building and rigorously testing trading strategies. Crucially, it can then facilitate the systematic execution of these strategies, thereby removing emotional biases from the trading process. This systematic approach can help mitigate common trading errors such as panic selling or revenge trading, leading to greater consistency.
“What it can do is help you build and test strategies, then execute them systematically, removing emotion from the equation.”
He emphasizes that AI cannot transform a fundamentally flawed strategy into a winning one. In Nithin Kamath’s view, the real value of AI lies in its capacity to foster discipline. He elaborates:
“AI can make you more disciplined, but not smarter. And if you think about where most trading losses actually come from, that distinction matters more than people realise.”
In conclusion, Nithin Kamath’s analysis positions AI not as a magic money-making machine for traders, but as a powerful tool for enhancing discipline and systematic execution, addressing the behavioral aspects that often undermine trading success. The real edge, he suggests, comes from disciplined adherence to well-tested strategies, an area where AI can indeed provide significant support.
📝 About This Content
This article is based on insights shared by Nithin Kamath on LinkedIn.
📅 Originally posted on March 31, 2026 | View original post on LinkedIn →