Goldman uses AI trading, so all alpha is captured.
That's like saying oil exploration ended because ExxonMobil exists.
The "AI is Done" Fallacy
Most traders dismiss AI opportunities when they hear about institutional adoption.
Their reasoning:
- Goldman and peers deployed ML years ago
- All obvious edges have been captured
- You can't compete with their resources
The reality: This thinking misunderstands how alpha generation actually works.
Even Statistics Aren't Exhausted Yet
Plain statistical automated trading strategies are running profitably right now.
Simple approaches still delivering:
- Traditional mean reversion systems
- Basic regression models capturing consistent alpha
- Standard deviation-based position sizing
If fundamental statistics haven't been exhausted, advanced AI certainly hasn't been either.
Why Size Becomes a Disadvantage
Billions in assets under management create constraints that smaller funds exploit.
What institutional scale actually means:
- Market impact limits strategy capacity
- Need hundreds of parallel strategies to deploy capital
- Organizational friction slows adoption of new techniques
Lean funds pivot quickly. Large institutions move slowly.
Technology Advances Faster Than Adoption
AI and ML development continues accelerating while large players lag implementation.
Recent developments creating opportunities:
- Advanced ensemble methods for signal combination
- Reinforcement learning for dynamic position sizing
- Alternative data integration techniques
Being big doesn't guarantee capturing every technological edge instantly.
The Alpha Regeneration Reality
Markets evolve continuously. New inefficiencies emerge as old ones disappear.
Why trading alpha isn't finite:
- Market microstructure changes create new patterns
- Technology adoption changes participant behavior
- Cross-market integration creates new possibilities
Alpha doesn't get exhausted. It relocates.
The Bottom Line
Goldman's AI success proves the opportunity exists.
It doesn't prove the opportunity is exhausted.
Technology advances continuously. Markets evolve constantly. New inefficiencies emerge regularly.
Smart funds recognize that institutional adoption creates gaps for nimble players to exploit.
→ AI trading alpha remains vast for funds positioned to move quickly.