Stock Market Bots: Their Legal Status And Expected Returns

Stock market robots have been dominating the stock market since the mid 1990’s. Since then all major trading firms have employed automated stock market trading robots to consistently have huge returns upwards of 20% in the stock market. (Source on 90’s growth in trading frequency)

This is a short article that explains the legal status of stock market robots and their expected returns. No two stock market bots are the same and that goes for their return. Just by reading this article you are going to set yourself up for success in the markets.

If you’re short on time there is a summary of this article at the end.

Here at Chronohistoria I teach people how to generate wealth in the investment world. I routinely publish articles on investment research, methodologies, and tips/tricks of the trade. Feel free to sign up for the free newsletter to remain up to date on everything.

Without wasting any time, let’s jump right into the article; Stock Market Bots: Their Legal Status and Expected Returns.

Stock Market Bot’s Legal Status

(This section talks about the concept of liquidity in the stock market. If you don’t know what that is I wrote up an entire article on the concept that you can find by clicking here)

A stock market bot/robot is not only perfectly legal, they are recommended to use by countries’ exchange regulating agencies. A stock market bot helps create liquidity in the market while also effectively managing risk. (Source for legality in the U.S)

Having automated stock trading bots actually helps exchanges provide liquidity to retail investors. This is because automated stock bots can employ advanced trading strategies where both the retail investor and stock bot benefit. (Source for increased liquidity in markets)

Every single country in the world encourages the use of stock bots. This won’t go away anytime soon. The reasoning behind this is because as the world becomes more connected there is more data to build out automated stock trading algorithms.

This increase in data will increase both the expected returns in the stock market along with total liquidity available for traders. With higher amounts of liquidity there is also a rise in retail traders. This also increases potential return for professional investors or traders. (higher liquidity = more retail traders = more economic gain for professional traders) (Source on this equation)

The above graph demonstrates how since the 1970’s stock market bots have been exploding. As more and more algorithmic stock bots come online there is more liquidity available for retail traders to ‘play with.’ This also increases total potential returns for professional traders. Simply put, everyone benefits from stock trading bots so they are legal.

If you are not using algorithms to trade in the stock market you are going to be leaving money on the table. This is because of the advanced strategies you can employ by using automated trading.

Now let’s go over their expected returns.

Expected Returns of Stock Market Bots

The average expected return of an automated stock market robot is directly correlated to how fast data can be processed. This type of bot trading is called high frequency trading and its expected return is between 15%-60% per year. (Source)

One of the most famous instances of automated trading bots returning huge ROI’s is Renaissance Technologies Golden Medallion Fund. This portfolio employs stock market bots and has an expected annual return rate of 74%! (Source)

These funds have complex data algorithms that make accurate price predictions in a fraction of a second. However there returns pale in comparison to high risk high frequency trading models. If you allow a wider margin for error and increased total risk you can see massive returns in the range of 2000%. To achieve these results however you are going to have to throw caution to the wind and have upwards of a 70% risk on the total portfolio.

By allowing more risk to be present in your portfolio you can see huge returns by using stock market bots.

These automated trading bots are not limited to the stock market either. A recent study done in 2021 indicated that stock market bots have even started to trade in the cryptocurrency market. The data used to drive these algorithms is only based around media reports and has seen massive returns by employing the same stock market bots. (Source)


Stock market bots are here to stay. They are perfectly legal and are actually encouraged to be used by regulating agencies such as the U.S SEC. A stock market bot is just a computer algorithm that incorporates outside data to make accurate price predictions. Because a stock bot increases total liquidity in the market they are legal and everyone should learn how to use them.

The average return of these stock market bots is in the range of 15-25%. Some stock bots such as the golden medallion fund at Renaissance Technologies see massive returns in the range of 70%.


There you have it, an entire article that goes over the legality of stock market bots and their expected returns. At the end of the day stock market bots are a good thing for all investors because they increase liquidity for the general public to use (retail traders).

At the end of the day the best way to invest in this market is to position yourself to gain passively over time. It takes some time to perfect this style of investing but in the end it will generate massive returns for you and your portfolio.

Here at Chronohistoria I teach people how to generate above average market returns (alpha). Feel free to sign up for the free newsletter to remain up to date on everything. 

Further, you can check out some of the other articles below

Until next time, I wish you the best of luck in your investing journey.