This paper presents our system for Task 3 of the CLEF 2026 FinMMEval Lab, which requires daily long, flat, or short trading decisions for Bitcoin (BTC) and Tesla (TSLA) using news and historical market data. We formulate the problem as a discrete-action Markov Decision Process and compare four deep reinforcement learning algorithms: Policy Gradient (PG), Proximal Policy Optimization (PPO), Deep Q-Learning (DQL), and Deep Deterministic Policy Gradient (DDPG). The agents use technical indicators, cyclical calendar encodings, and daily news sentiment scores produced by LLaMA 3.2 1B. To reduce overfitting and align training with the objective of outperforming buy-and-hold, we introduce an alpha reward based on excess market return and randomize episode start dates. Hyperparameters are optimized with Ray Tune over 180 trials per algorithm-asset pair, with early stopping and model selection based on validation Sharpe ratio. On the CLEF Task 3 test set, DDPG achieves the strongest overall performance. DQL was selected a priori for the live endpoint because it obtained the highest validation Sharpe ratio, with selection performed without access to the test period. For TSLA, DDPG and DQL achieve cumulative returns of 54.96% and 52.62%, respectively, compared with 16.45% for buy-and-hold. For BTC, DDPG achieves a positive return of 1.58% while buy-and-hold declines by -34.27%. The results also reveal a substantial validation-to-test generalization gap, highlighting the difficulty of transferring policies selected in bull-market conditions to a bear-market regime.
Large language model (LLM) trading agents show promising performance in equity markets, yet remain narrowly focused on US equities with little evidence from live deployment. We present Fin-Analyst, a hybrid agent for FinMMEval 2026 Task 3: an eight-specialist LLM pipeline over news, SEC filings, fundamentals, analyst forecasts, technical indicators, and social sentiment, aggregated by a Meta-Agent for Tesla (TSLA), and a lightweight rule based three-signal vote for Bitcoin (BTC). On the final official leaderboard (accessed 2026-07-05), Fin-Analyst ranks first of all agents on TSLA with a +13.51% return, +28.33 points over Buy-and-Hold (Sharpe 4.10, 88% win rate), while the BTC vote ends flat yet well above a sharply falling baseline. Relative to the interim performance, the asset ranking reversed, indicating that short live windows yield volatility-sensitive rankings. Ablation identifies event-driven 8-K disclosures as the most influential TSLA signal. Error analysis shows that the memoryless agents repeat wrong calls for days at a time, and that the fixed-threshold BTC rules lost money by trading on noise in a sideways market while the LLM pipeline gained under similar conditions, motivating a memory-aware, LLM-based successor for both assets.
This study develops and evaluates a deep reinforcement learning framework for dynamic portfolio allocation across global equity markets. The Soft Actor-Critic algorithm is used to learn continuous portfolio weights within a Markov Decision Process, incorporating transaction costs, turnover penalties, and diversification constraints into the reward function. Five model configurations are compared, varying in reward formulation, policy structure (flat versus hierarchical Dirichlet), portfolio constraints, and temporal encoder (LSTM versus Transformer), and evaluated via walk-forward optimization across sixteen out-of-sample folds spanning 2003-2026 on the Nasdaq-100, Nikkei 225, and Euro Stoxx 50. Results show that RL strategies achieve competitive risk-adjusted performance primarily in the Euro Stoxx 50, where statistically significant abnormal returns are observed, but the central hypothesis is only partially confirmed: no strategy achieves statistically significant excess returns relative to Buy and Hold under HAC-robust inference across all markets. Regime analysis reveals that RL adds the most value during periods of elevated uncertainty, while ensemble aggregation across markets improves risk-adjusted performance and confirms the benefits of geographic diversification.
Recent advances in Generative AI have substantially improved financial sentiment analysis through post-trained financial large language models (LLMs). However, existing approaches remain confined to a market-agnostic, supervised learning paradigm that relies on limited, static and human-annotated datasets, and thus are incapable of adapting to evolving market conditions. To address this limitation, we introduce FinSMART, the first market-aligned reinforcement learning framework for financial sentiment analysis, which directly optimizes sentiment signals using realized market outcomes. To deal with the noisy, non-stationary, and multifactorial nature of financial markets, FinSMART incorporates a signal extraction pipeline that combines market-aware data filtering with a discrete asymmetric trading reward, enabling stable reinforcement learning from economically meaningful market feedback. Experimental results demonstrate that FinSMART significantly outperforms existing state-of-the-art methods in profitability, risk-adjusted performance, and sentiment signal quality, improving cumulative trading returns by 220% over the strongest baseline. Uniquely, the FinSMART framework naturally supports market-aware retraining, at any point in time, by replacing costly manual annotation with newly observed financial articles and their realized market outcomes. Such a retraining strategy enables the model to continuously adapt to changing market dynamics, resulting in consistent performance gains over its static counterpart. These findings demonstrate the practical applicability of market-aligned reinforcement learning and highlight its potential as a next-generation paradigm for developing adaptive financial LLMs.