MadEvolve: Evolutionary Optimization of Trading Systems with Large Language Models

Recent work shows that Large Language Models (LLMs) can act as semantic mutation operators for the evolutionary discovery of programs and proofs. Most current applications focus on static coding benchmarks. We extend this paradigm to algorithmic trading. This domain is uniquely challenging because it is noisy, non-stationary, and highly discontinuous. We present AlgoEvolve, an LLM-driven evolutionary framework that generates, evaluates, and iteratively improves executable trading strategies. These strategies are expressed as Python code and evaluated through a rigorous testing protocol. Across multiple experiments, the system exhibits emergent regime-adaptive strategy logic, including autonomous shifts in trading rules. We further introduce a meta-evolutionary outer loop that evolves the prompts guiding program synthesis in the inner loop. This outer loop discovers improved search heuristics. These heuristics balance exploration and exploitation while reducing zero-trade failures. They consistently outperform initial human-designed instructions. The results demonstrate that LLM-based semantic evolution provides a viable approach for continual program synthesis in complex environments.

Quantitative strategy optimization remains largely manual, requiring domain experts to identify weak signals, tune risk-control rules, and repeatedly validate iterative revisions. Large language models can accelerate this process, but directly relying on them to rewrite trading strategies often introduces hallucinated edits, strategy drift, and backtest overfitting. We propose EVOQUANT, a self-Evolving Verifier-guided framework for strategy Optimization in Quantitative trading. Our method utilizes LLMs to deeply diagnose performance bottlenecks, generates semantically controlled candidate edits, selects the best strategy through a multi-stage verification pipeline, and distills optimization experience into reusable knowledge for continual self-improvement. We evaluate our method using seven representative strategies: four from the A-share market and three from the Crypto market. Experimental results show that our method significantly improves the Sharpe ratio across all tested strategies: the average test Sharpe increases from -0.298 to 0.538, and the best-performing strategy achieves a 199% relative improvement. Ablation studies and stress tests under stricter conditions further validate the effectiveness and robustness of the framework. Overall, this work transforms quantitative strategy optimization from costly manual trial and error into an automated and verifiable iterative paradigm, offering a new path for applying large language models to financial strategy research.

Large Language Model (LLM)-guided evolutionary search is increasingly used for automated algorithm discovery, yet most current methods track search progress primarily through executable programs and scalar fitness. Even when natural-language reasoning is used through heuristic descriptions or reflection, it typically remains transient mutation context or unstructured memory, rather than organized as persistent population-level state over strategic directions. As a result, evolutionary search can struggle to distinguish syntactically different implementations of the same idea, preserve lower-fitness but strategically promising directions, or detect when an entire family of strategies has saturated. We introduce \model, a modular strategy-space layer that turns language-level strategic reasoning into first-class population-level evolutionary state in LLM-driven program search. \model represents each candidate program with an explicit natural-language strategy, clusters the archive by strategy semantics, retrieves behaviorally complementary inspirations, and periodically navigates the strategy landscape to avoid saturated directions. Without modifying the underlying evolutionary algorithms, \model improves existing evolutionary backbones across algorithm discovery, systems optimization, and agent-scaffold design tasks in most settings. Across four systems benchmarks, \model achieves a 20.6% average relative improvement, with the best single run on Prism scoring 3$\times$ higher. These results suggest that persistent strategy representations provide a practical mechanism for improving the effectiveness and cost-efficiency of LLM-guided evolutionary search, pointing toward compound AI systems whose search capabilities benefit from the structured accumulation and reuse of algorithmic strategies.