# FinMem: A Performance-Enhanced LLM Trading Agent with Layered Memory and Character Design

arXiv: https://arxiv.org/abs/2311.13743 · HTML: https://mlsanity.com/paper/2311.13743/

## Key facts

- Cited by 164 papers in the map (data through 14 Oct 2026).
- Placed in Financial trading and forecasting agents, one of 16 directions in LLM agents and tool use.
- Builds on 23 of its 56 references that are in the map.
- First posted on arXiv 23 Nov 2023.

## Placed in

- LLM agents and tool use / [Financial trading and forecasting agents](https://mlsanity.com/agents/financial-trading-and-forecasting-agents/)

## Builds on (most cited first, 23 of 23)

- [BERT: Pre-training of Deep Bidirectional Transformers for Language Understanding](https://mlsanity.com/paper/1810.04805/) (2018)
- [Proximal Policy Optimization Algorithms](https://mlsanity.com/paper/1707.06347/) (2017)
- [LLaMA: Open and Efficient Foundation Language Models](https://mlsanity.com/paper/2302.13971/) (2023)
- [Generative Agents: Interactive Simulacra of Human Behavior](https://mlsanity.com/paper/2304.03442/) (2023)
- [Playing Atari with Deep Reinforcement Learning](https://mlsanity.com/paper/1312.5602/) (2013)
- [A Survey of Large Language Models](https://mlsanity.com/paper/2303.18223/) (2023)
- [Billion-scale similarity search with GPUs](https://mlsanity.com/paper/1702.08734/) (2017)
- [Asynchronous Methods for Deep Reinforcement Learning](https://mlsanity.com/paper/1602.01783/) (2016)
- [A Survey on Large Language Model based Autonomous Agents](https://mlsanity.com/paper/2308.11432/) (2023)
- [BloombergGPT: A Large Language Model for Finance](https://mlsanity.com/paper/2303.17564/) (2023)
- [How Contextual are Contextualized Word Representations? Comparing the Geometry of BERT, ELMo, and GPT-2 Embeddings](https://mlsanity.com/paper/1909.00512/) (2019)
- [Cognitive Architectures for Language Agents](https://mlsanity.com/paper/2309.02427/) (2023)
- [Social Simulacra: Creating Populated Prototypes for Social Computing Systems](https://mlsanity.com/paper/2208.04024/) (2022)
- [FinGPT: Open-Source Financial Large Language Models](https://mlsanity.com/paper/2306.06031/) (2023)
- [Building Cooperative Embodied Agents Modularly with Large Language Models](https://mlsanity.com/paper/2307.02485/) (2023)
- [Making Large Language Models Better Reasoners with Step-Aware Verifier](https://mlsanity.com/paper/2206.02336/) (2022)
- [word2vec Explained: deriving Mikolov et al.'s negative-sampling word-embedding method](https://mlsanity.com/paper/1402.3722/) (2014)
- [FinRL: A Deep Reinforcement Learning Library for Automated Stock Trading in Quantitative Finance](https://mlsanity.com/paper/2011.09607/) (2020)
- [CodeHelp: Using Large Language Models with Guardrails for Scalable Support in Programming Classes](https://mlsanity.com/paper/2308.06921/) (2023)
- [FinRL: Deep Reinforcement Learning Framework to Automate Trading in Quantitative Finance](https://mlsanity.com/paper/2111.09395/) (2021)
- [Practical Deep Reinforcement Learning Approach for Stock Trading](https://mlsanity.com/paper/1811.07522/) (2018)
- [Memory Sandbox: Transparent and Interactive Memory Management for Conversational Agents](https://mlsanity.com/paper/2308.01542/) (2023)
- [Deep Reinforcement Learning in Quantitative Algorithmic Trading: A Review](https://mlsanity.com/paper/2106.00123/) (2021)

## Built on by (most cited first, 30 of 164)

- [Mem0: Building Production-Ready AI Agents with Scalable Long-Term Memory](https://mlsanity.com/paper/2504.19413/) (2025)
- [A Survey on the Memory Mechanism of Large Language Model based Agents](https://mlsanity.com/paper/2404.13501/) (2024)
- [Agent Security Bench (ASB): Formalizing and Benchmarking Attacks and Defenses in LLM-based Agents](https://mlsanity.com/paper/2410.02644/) (2024)
- [TradingAgents: Multi-Agents LLM Financial Trading Framework](https://mlsanity.com/paper/2412.20138/) (2024)
- [FinBen: A Holistic Financial Benchmark for Large Language Models](https://mlsanity.com/paper/2402.12659/) (2024)
- [Towards a Science of Scaling Agent Systems](https://mlsanity.com/paper/2512.08296/) (2025)
- [A Multimodal Foundation Agent for Financial Trading: Tool-Augmented, Diversified, and Generalist](https://mlsanity.com/paper/2402.18485/) (2024)
- [Adaptive Attacks Break Defenses Against Indirect Prompt Injection Attacks on LLM Agents](https://mlsanity.com/paper/2503.00061/) (2025)
- [GuardAgent: Safeguard LLM Agents by a Guard Agent via Knowledge-Enabled Reasoning](https://mlsanity.com/paper/2406.09187/) (2024)
- [FinCon: A Synthesized LLM Multi-Agent System with Conceptual Verbal Reinforcement for Enhanced Financial Decision Making](https://mlsanity.com/paper/2407.06567/) (2024)
- [A Survey of Large Language Models for Financial Applications: Progress, Prospects and Challenges](https://mlsanity.com/paper/2406.11903/) (2024)
- [Fin-R1: A Large Language Model for Financial Reasoning through Reinforcement Learning](https://mlsanity.com/paper/2503.16252/) (2025)
- [TrustAgent: Towards Safe and Trustworthy LLM-based Agents](https://mlsanity.com/paper/2402.01586/) (2024)
- [INVESTORBENCH: A Benchmark for Financial Decision-Making Tasks with LLM-based Agent](https://mlsanity.com/paper/2412.18174/) (2024)
- [A Survey of LLM-Driven AI Agent Communication: Protocols, Security Risks, and Defense Countermeasures](https://mlsanity.com/paper/2506.19676/) (2025)
- [A Survey of Agentic Reasoning for Large Language Models: Towards Recursively Self-Improving and Collective Agents](https://mlsanity.com/paper/2601.12538/) (2026)
- [A Survey on the Optimization of Large Language Model-based Agents](https://mlsanity.com/paper/2503.12434/) (2025)
- [Structured Uncertainty guided Clarification for LLM Agents](https://mlsanity.com/paper/2511.08798/) (2025)
- [FinRobot: An Open-Source AI Agent Platform for Financial Applications using Large Language Models](https://mlsanity.com/paper/2405.14767/) (2024)
- [Richelieu: Self-Evolving LLM-Based Agents for AI Diplomacy](https://mlsanity.com/paper/2407.06813/) (2024)
- [Automate Strategy Finding with LLM in Quant Investment](https://mlsanity.com/paper/2409.06289/) (2024)
- [Emotional RAG: Enhancing Role-Playing Agents through Emotional Retrieval](https://mlsanity.com/paper/2410.23041/) (2024)
- [Graph-based Agent Memory: Taxonomy, Techniques, and Applications](https://mlsanity.com/paper/2602.05665/) (2026)
- [HedgeAgents: A Balanced-aware Multi-agent Financial Trading System](https://mlsanity.com/paper/2502.13165/) (2025)
- [FLAG-Trader: Fusion LLM-Agent with Gradient-based Reinforcement Learning for Financial Trading](https://mlsanity.com/paper/2502.11433/) (2025)
- [Time Travel is Cheating: Going Live with DeepFund for Real-Time Fund Investment Benchmarking](https://mlsanity.com/paper/2505.11065/) (2025)
- [A Survey of Reasoning and Agentic Systems in Time Series with Large Language Models](https://mlsanity.com/paper/2509.11575/) (2025)
- [Can LLM-based Financial Investing Strategies Outperform the Market in Long Run?](https://mlsanity.com/paper/2505.07078/) (2025)
- [HiMem: Hierarchical Long-Term Memory for LLM Long-Horizon Agents](https://mlsanity.com/paper/2601.06377/) (2026)
- [RAS-Eval: A Comprehensive Benchmark for Security Evaluation of LLM Agents in Real-World Environments](https://mlsanity.com/paper/2506.15253/) (2025)

## Abstract (arXiv)

Recent advancements in Large Language Models (LLMs) have exhibited notable efficacy in question-answering (QA) tasks across diverse domains. Their prowess in integrating extensive web knowledge has fueled interest in developing LLM-based autonomous agents. While LLMs are efficient in decoding human instructions and deriving solutions by holistically processing historical inputs, transitioning to purpose-driven agents requires a supplementary rational architecture to process multi-source information, establish reasoning chains, and prioritize critical tasks. Addressing this, we introduce textscFinMem, a novel LLM-based agent framework devised for financial decision-making. It encompasses three core modules: Profiling, to customize the agent's characteristics; Memory, with layered message processing, to aid the agent in assimilating hierarchical financial data; and Decision-making, to convert insights gained from memories into investment decisions. Notably, textscFinMem's memory module aligns closely with the cognitive structure of human traders, offering robust interpretability and real-time tuning. Its adjustable cognitive span allows for the retention of critical information beyond human perceptual limits, thereby enhancing trading outcomes. This framework enables the agent to self-evolve its professional knowledge, react agilely to new investment cues, and continuously refine trading decisions in the volatile financial environment. We first compare textscFinMem with various algorithmic agents on a scalable real-world financial dataset, underscoring its leading trading performance in stocks. We then fine-tuned the agent's perceptual span and character setting to achieve a significantly enhanced trading performance. Collectively, textscFinMem presents a cutting-edge LLM agent framework for automated trading, boosting cumulative investment returns.