aiqbench analysis
This research introduces ACE-Trader, a framework utilizing adversarial co-evolution to enhance LLM-based trading systems through dynamic interaction between a decision-maker and a red-team evaluator. By implementing context-dependent memory selectors and shared feedback loops, the system effectively addresses the challenge of deriving useful experience from joint agent actions in volatile market conditions. Experimental results on U.S. stock data demonstrate superior performance in cumulative returns and risk metrics compared to 22 active baselines, highlighting the potential of co-evolutionary methods for robust financial AI agents.
ACE-Trader: Adversarial Co-Evolution for Generator-Critic Trading Systems
arXiv:2610.25847v1 Announce Type: new Abstract: Generator--critic trading systems pair an LLM-based trader that makes trading decisions with a red team agent that evaluates these decisions and provides feedback for revision. However, improving individual trading decisions does not ensure that both agents learn from experience and improve together over time. This raises an important question: how can the trader and red-Team select useful experience and learn from each other's evolving behavior? On one hand, experience that benefits decisions under one market condition may become ineffective or harmful under another. On the other hand, trading outcomes reflect both agents' actions, making it difficult to derive appropriate experience for each role. In this work, we propose ACE-Trader, an adversarial co-evolution trading framework. Specifically, we first develop separate context-dependent memory selectors that learn to identify useful experience for the current trading decision. Both selectors receive shared feedback from net-return differences between complete memory-assisted and memory-free trading pipelines, with online updates emphasizing recent outcomes. We further design a co-evolution mechanism that links role-specific memories through shared trading records. We use these records to evaluate the Red-Team's risk assessments and the effects of the Trader's revisions against realized market outcomes, then derive experience for their respective memories. By linking this experience to the corresponding records, we enable the Trader to improve its proposals based on prior critiques and the Red-Team to adjust its review focus as the Trader's behavior changes. Experiments on U.S. stock trading show that ACE-Trader outperforms all 22 active baselines in cumulative return and achieves the highest Sharpe ratio and lowest maximum drawdown across both active methods and passive benchmarks.
Abstract:Generator--critic trading systems pair an LLM-based trader that makes trading decisions with a red team agent that evaluates these decisions and provides feedback for revision. However, improving individual trading decisions does not ensure that both agents learn from experience and improve together over time. This raises an important question: how can the trader and red-Team select useful experience and learn from each other's evolving behavior? On one hand, experience that benefits decisions under one market condition may become ineffective or harmful under another. On the other hand, trading outcomes reflect both agents' actions, making it difficult to derive appropriate experience for each role. In this work, we propose ACE-Trader, an adversarial co-evolution trading framework. Specifically, we first develop separate context-dependent memory selectors that learn to identify useful experience for the current trading decision. Both selectors receive shared feedback from net-return differences between complete memory-assisted and memory-free trading pipelines, with online updates emphasizing recent outcomes. We further design a co-evolution mechanism that links role-specific memories through shared trading records. We use these records to evaluate the Red-Team's risk assessments and the effects of the Trader's revisions against realized market outcomes, then derive experience for their respective memories. By linking this experience to the corresponding records, we enable the Trader to improve its proposals based on prior critiques and the Red-Team to adjust its review focus as the Trader's behavior changes. Experiments on U.S. stock trading show that ACE-Trader outperforms all 22 active baselines in cumulative return and achieves the highest Sharpe ratio and lowest maximum drawdown across both active methods and passive benchmarks.
Machine Learning (cs.LG)
arXiv:2610.25847 [cs.LG]
(or arXiv:2610.25847v1 [cs.LG] for this version)
https://doi.org/10.48550/arXiv.2610.25847 Focus to learn more arXiv-issued DOI via DataCite
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