Large Language Models

Can ChatGPT Overcome Behavioral Biases in the Financial Sector? Classify-and-Rethink: Multi-Step Zero-Shot Reasoning in the Gold Investment ArXiv ID: 2411.13599 “View on arXiv” Authors: Unknown Abstract Large Language Models (LLMs) have achieved remarkable success recently, displaying exceptional capabilities in creating understandable and organized text. These LLMs have been utilized in diverse fields, such as clinical research, where domain-specific models like Med-Palm have achieved human-level performance. Recently, researchers have employed advanced prompt engineering to enhance the general reasoning ability of LLMs. Despite the remarkable success of zero-shot Chain-of-Thoughts (CoT) in solving general reasoning tasks, the potential of these methods still remains paid limited attention in the financial reasoning task.To address this issue, we explore multiple prompt strategies and incorporated semantic news information to improve LLMs’ performance on financial reasoning tasks.To the best of our knowledge, we are the first to explore this important issue by applying ChatGPT to the gold investment.In this work, our aim is to investigate the financial reasoning capabilities of LLMs and their capacity to generate logical and persuasive investment opinions. We will use ChatGPT, one of the most powerful LLMs recently, and prompt engineering to achieve this goal. Our research will focus on understanding the ability of LLMs in sophisticated analysis and reasoning within the context of investment decision-making. Our study finds that ChatGPT with CoT prompt can provide more explainable predictions and overcome behavioral biases, which is crucial in finance-related tasks and can achieve higher investment returns. ...

Financial News-Driven LLM Reinforcement Learning for Portfolio Management ArXiv ID: 2411.11059 “View on arXiv” Authors: Unknown Abstract Reinforcement learning (RL) has emerged as a transformative approach for financial trading, enabling dynamic strategy optimization in complex markets. This study explores the integration of sentiment analysis, derived from large language models (LLMs), into RL frameworks to enhance trading performance. Experiments were conducted on single-stock trading with Apple Inc. (AAPL) and portfolio trading with the ING Corporate Leaders Trust Series B (LEXCX). The sentiment-enhanced RL models demonstrated superior net worth and cumulative profit compared to RL models without sentiment and, in the portfolio experiment, outperformed the actual LEXCX portfolio’s buy-and-hold strategy. These results highlight the potential of incorporating qualitative market signals to improve decision-making, bridging the gap between quantitative and qualitative approaches in financial trading. ...

FinVision: A Multi-Agent Framework for Stock Market Prediction ArXiv ID: 2411.08899 “View on arXiv” Authors: Unknown Abstract Financial trading has been a challenging task, as it requires the integration of vast amounts of data from various modalities. Traditional deep learning and reinforcement learning methods require large training data and often involve encoding various data types into numerical formats for model input, which limits the explainability of model behavior. Recently, LLM-based agents have demonstrated remarkable advancements in handling multi-modal data, enabling them to execute complex, multi-step decision-making tasks while providing insights into their thought processes. This research introduces a multi-modal multi-agent system designed specifically for financial trading tasks. Our framework employs a team of specialized LLM-based agents, each adept at processing and interpreting various forms of financial data, such as textual news reports, candlestick charts, and trading signal charts. A key feature of our approach is the integration of a reflection module, which conducts analyses of historical trading signals and their outcomes. This reflective process is instrumental in enhancing the decision-making capabilities of the system for future trading scenarios. Furthermore, the ablation studies indicate that the visual reflection module plays a crucial role in enhancing the decision-making capabilities of our framework. ...

Do LLM Personas Dream of Bull Markets? Comparing Human and AI Investment Strategies Through the Lens of the Five-Factor Model ArXiv ID: 2411.05801 “View on arXiv” Authors: Unknown Abstract Large Language Models (LLMs) have demonstrated the ability to adopt a personality and behave in a human-like manner. There is a large body of research that investigates the behavioural impacts of personality in less obvious areas such as investment attitudes or creative decision making. In this study, we investigated whether an LLM persona with a specific Big Five personality profile would perform an investment task similarly to a human with the same personality traits. We used a simulated investment task to determine if these results could be generalised into actual behaviours. In this simulated environment, our results show these personas produced meaningful behavioural differences in all assessed categories, with these behaviours generally being consistent with expectations derived from human research. We found that LLMs are able to generalise traits into expected behaviours in three areas: learning style, impulsivity and risk appetite while environmental attitudes could not be accurately represented. In addition, we showed that LLMs produce behaviour that is more reflective of human behaviour in a simulation environment compared to a survey environment. ...

TraderTalk: An LLM Behavioural ABM applied to Simulating Human Bilateral Trading Interactions ArXiv ID: 2410.21280 “View on arXiv” Authors: Unknown Abstract We introduce a novel hybrid approach that augments Agent-Based Models (ABMs) with behaviors generated by Large Language Models (LLMs) to simulate human trading interactions. We call our model TraderTalk. Leveraging LLMs trained on extensive human-authored text, we capture detailed and nuanced representations of bilateral conversations in financial trading. Applying this Generative Agent-Based Model (GABM) to government bond markets, we replicate trading decisions between two stylised virtual humans. Our method addresses both structural challenges, such as coordinating turn-taking between realistic LLM-based agents, and design challenges, including the interpretation of LLM outputs by the agent model. By exploring prompt design opportunistically rather than systematically, we enhance the realism of agent interactions without exhaustive overfitting or model reliance. Our approach successfully replicates trade-to-order volume ratios observed in related asset markets, demonstrating the potential of LLM-augmented ABMs in financial simulations ...

The Construction of Instruction-tuned LLMs for Finance without Instruction Data Using Continual Pretraining and Model Merging ArXiv ID: 2409.19854 “View on arXiv” Authors: Unknown Abstract This paper proposes a novel method for constructing instruction-tuned large language models (LLMs) for finance without instruction data. Traditionally, developing such domain-specific LLMs has been resource-intensive, requiring a large dataset and significant computational power for continual pretraining and instruction tuning. Our study proposes a simpler approach that combines domain-specific continual pretraining with model merging. Given that general-purpose pretrained LLMs and their instruction-tuned LLMs are often publicly available, they can be leveraged to obtain the necessary instruction task vector. By merging this with a domain-specific pretrained vector, we can effectively create instruction-tuned LLMs for finance without additional instruction data. Our process involves two steps: first, we perform continual pretraining on financial data; second, we merge the instruction-tuned vector with the domain-specific pretrained vector. Our experiments demonstrate the successful construction of instruction-tuned LLMs for finance. One major advantage of our method is that the instruction-tuned and domain-specific pretrained vectors are nearly independent. This independence makes our approach highly effective. The Japanese financial instruction-tuned LLMs we developed in this study are available at https://huggingface.co/pfnet/nekomata-14b-pfn-qfin-inst-merge. ...

Strategic Collusion of LLM Agents: Market Division in Multi-Commodity Competitions ArXiv ID: 2410.00031 “View on arXiv” Authors: Unknown Abstract Machine-learning technologies are seeing increased deployment in real-world market scenarios. In this work, we explore the strategic behaviors of large language models (LLMs) when deployed as autonomous agents in multi-commodity markets, specifically within Cournot competition frameworks. We examine whether LLMs can independently engage in anti-competitive practices such as collusion or, more specifically, market division. Our findings demonstrate that LLMs can effectively monopolize specific commodities by dynamically adjusting their pricing and resource allocation strategies, thereby maximizing profitability without direct human input or explicit collusion commands. These results pose unique challenges and opportunities for businesses looking to integrate AI into strategic roles and for regulatory bodies tasked with maintaining fair and competitive markets. The study provides a foundation for further exploration into the ramifications of deferring high-stakes decisions to LLM-based agents. ...

KodeXv0.1: A Family of State-of-the-Art Financial Large Language Models ArXiv ID: 2409.13749 “View on arXiv” Authors: Unknown Abstract Although powerful, current cutting-edge LLMs may not fulfil the needs of highly specialised sectors. We introduce KodeXv0.1, a family of large language models that outclass GPT-4 in financial question answering. We utilise the base variants of Llama 3.1 8B and 70B and adapt them to the financial domain through a custom training regime. To this end, we collect and process a large number of publicly available financial documents such as earnings calls and business reports. These are used to generate a high-quality, synthetic dataset consisting of Context-Question-Answer triplets which closely mirror real-world financial tasks. Using the train split of this dataset, we perform RAG-aware 4bit LoRA instruction tuning runs of Llama 3.1 base variants to produce KodeX-8Bv0.1 and KodeX-70Bv0.1. We then complete extensive model evaluations using FinanceBench, FinQABench and the withheld test split of our dataset. Our results show that KodeX-8Bv0.1 is more reliable in financial contexts than cutting-edge instruct models in the same parameter regime, surpassing them by up to 9.24%. In addition, it is even capable of outperforming state-of-the-art proprietary models such as GPT-4 by up to 7.07%. KodeX-70Bv0.1 represents a further improvement upon this, exceeding GPT-4’s performance on every tested benchmark. ...

FinDKG: Dynamic Knowledge Graphs with Large Language Models for Detecting Global Trends in Financial Markets ArXiv ID: 2407.10909 “View on arXiv” Authors: Unknown Abstract Dynamic knowledge graphs (DKGs) are popular structures to express different types of connections between objects over time. They can also serve as an efficient mathematical tool to represent information extracted from complex unstructured data sources, such as text or images. Within financial applications, DKGs could be used to detect trends for strategic thematic investing, based on information obtained from financial news articles. In this work, we explore the properties of large language models (LLMs) as dynamic knowledge graph generators, proposing a novel open-source fine-tuned LLM for this purpose, called the Integrated Contextual Knowledge Graph Generator (ICKG). We use ICKG to produce a novel open-source DKG from a corpus of financial news articles, called FinDKG, and we propose an attention-based GNN architecture for analysing it, called KGTransformer. We test the performance of the proposed model on benchmark datasets and FinDKG, demonstrating superior performance on link prediction tasks. Additionally, we evaluate the performance of the KGTransformer on FinDKG for thematic investing, showing it can outperform existing thematic ETFs. ...

FinRobot: An Open-Source AI Agent Platform for Financial Applications using Large Language Models ArXiv ID: 2405.14767 “View on arXiv” Authors: Unknown Abstract As financial institutions and professionals increasingly incorporate Large Language Models (LLMs) into their workflows, substantial barriers, including proprietary data and specialized knowledge, persist between the finance sector and the AI community. These challenges impede the AI community’s ability to enhance financial tasks effectively. Acknowledging financial analysis’s critical role, we aim to devise financial-specialized LLM-based toolchains and democratize access to them through open-source initiatives, promoting wider AI adoption in financial decision-making. In this paper, we introduce FinRobot, a novel open-source AI agent platform supporting multiple financially specialized AI agents, each powered by LLM. Specifically, the platform consists of four major layers: 1) the Financial AI Agents layer that formulates Financial Chain-of-Thought (CoT) by breaking sophisticated financial problems down into logical sequences; 2) the Financial LLM Algorithms layer dynamically configures appropriate model application strategies for specific tasks; 3) the LLMOps and DataOps layer produces accurate models by applying training/fine-tuning techniques and using task-relevant data; 4) the Multi-source LLM Foundation Models layer that integrates various LLMs and enables the above layers to access them directly. Finally, FinRobot provides hands-on for both professional-grade analysts and laypersons to utilize powerful AI techniques for advanced financial analysis. We open-source FinRobot at \url{“https://github.com/AI4Finance-Foundation/FinRobot"}. ...