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Algo Trading vs AI Trading: How bots & brains decode rules, discipline, speed & strategy

Algo Trading vs AI Trading: How bots & brains decode rules, discipline, speed & strategy

The new fad of trading is not just bulls and bears; it is about bots and brains as well. Technology is doing the heavy lifting and two approaches are front and center- Algorithmic trading and AI-driven trading.

Pawan Kumar Nahar
Pawan Kumar Nahar
  • Updated Jun 16, 2025 12:01 PM IST
Algo Trading vs AI Trading: How bots & brains decode rules, discipline, speed & strategyTanla Platforms shares are trading 48% below the previous buyback price, signaling a major drop in market value since the last buyback.

Stock market trading in India has emerged as a new mania thanks to growing financial literacy, digital access, and a surge in retail investor participation. With increased awareness, smartphone penetration, and user-friendly platforms, Indians are actively engaging in equity, options and derivative trading, if we keep the profitability aside.

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The new fad of trading is not just bulls and bears; it is about bots and brains as well. Technology is doing the heavy lifting and two approaches are front and center- Algorithmic trading and AI-driven trading.

Prima facie, they may sound similar, the use of automation to execute trades. But if you observe properly, they are solving different problems in different ways, says Trivesh D,COO at Tradejini. Here are the key differences between Algo-based trading and AI trading.


Fixed rules vs evolving intelligence

Markets are inconsistent and dynamic in nature. If something is working today, it may not work tomorrow because other traders will catch on, adapt, and nullify one's edge. Throw in a few macro shocks or regulatory changes, and suddenly the tried and tested fails to deliver results.

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"The biggest difference is in how each system thinks. Algo trading is rule-based. You feed it a condition that says, ‘Buy if the stock rises above yesterday’s high on higher volume,’ and it follows that rule every time. It’s fast, emotionless, and perfect when consistency and execution are key," said Trivesh D. On the other hand, AI learns from the data it processes, instead of simply following fixed rules.


Speed and insight

Algo trading is built for speed. It can slice through the market faster, executing hundreds of trades just in a few seconds. It is very valuable for a high-frequency trader or running quant strategies where every tick counts. Contrary, if a trader is looking for insights, like, spotting subtle correlations, behavioural shifts, or pricing inefficiencies buried deep in data, then AI comes to the rescue.

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"AI has the power to process years of structured and unstructured data and still find patterns that humans or simple rule-based systems would miss. The real game today is in being able to see around corners. AI doesn’t just look at what’s happening, it anticipates what might happen," Trivesh from Tradejini said.
 

Reliability vs Adaptability

Algo trading is like a dependable assistant. It does exactly what it is told. If your goal is to reduce slippage, control costs, or stick to a disciplined strategy, Algo trading is a solid choice. AI, on the other hand, is more like a research analyst who’s constantly learning from the past.

It revisits its own performance, learns from mistakes, and improves over time. That level of adaptability can be a game-changer, especially in markets where change is the only constant, Trivesh said.
 

Which one is better?

Market experts say that there is no clear winner in the AI Trading vs Algo Trading debate. Rather, one should decide based on their objective. Both co-exist in most professional environments today. While AI models help build smarter strategies, the algos execute them with speed and efficiency.

"If running a strategy with better execution speed and discipline is more important than adaptability, then algo trading is the tool. While, if one needs to make sense of a complex, shifting landscape processing large datasets, adjusting to changing patterns, AI can give you a real edge," explains Trivesh D.

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"The next generation trader is not just someone who reads charts or news, but someone who knows how to use both algo and AI tools effectively. It is not man versus machine anymore; it is with machine. The future of trading is smart, adaptive, and collaborative. The ones who understand how to combine dependability with responsiveness are probably going to remain ahead," he added.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Jun 16, 2025 12:01 PM IST
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