(I do not work in the industry, this is just a speculation) I believe the way algorithmic trading works is first the trader designs a strategy and estimates a s

(I do not work in the industry, this is just a speculation) I believe the way algorithmic trading works is first the trader designs a strategy and estimates a success rate (from what I assume is past data). For example, a strategy may be successful (profitable) 53% of the time. This means that 47% of the time there is a loss. However if the 3% gain is large enough to cover the difference you're going to be up for the day.