# CLaC@FinMMEval 2026 Task 3: Sentiment-Augmented Deep Reinforcement Learning for Active Trading -- An Alpha-Reward Approach

arXiv: https://arxiv.org/abs/2607.16028 · HTML: https://mlsanity.com/paper/2607.16028/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Placed in Adversarial robustness and RL in finance, one of 15 directions in Deep reinforcement learning methods.
- Builds on 10 of its 27 references that are in the map.
- First posted on arXiv 17 Jul 2026.

## Placed in

- Deep reinforcement learning methods / [Adversarial robustness and RL in finance](https://mlsanity.com/deeprl/adversarial-robustness-and-rl-in-finance/)

## Builds on (most cited first, 10 of 10)

- [The Llama 3 Herd of Models](https://mlsanity.com/paper/2407.21783/) (2024)
- [Continuous control with deep reinforcement learning](https://mlsanity.com/paper/1509.02971/) (2015)
- [Asynchronous Methods for Deep Reinforcement Learning](https://mlsanity.com/paper/1602.01783/) (2016)
- [Deep Reinforcement Learning with Double Q-learning](https://mlsanity.com/paper/1509.06461/) (2015)
- [FinBERT: Financial Sentiment Analysis with Pre-trained Language Models](https://mlsanity.com/paper/1908.10063/) (2019)
- [Can ChatGPT Forecast Stock Price Movements? Return Predictability and Large Language Models](https://mlsanity.com/paper/2304.07619/) (2023)
- [A Deep Reinforcement Learning Framework for the Financial Portfolio Management Problem](https://mlsanity.com/paper/1706.10059/) (2017)
- [Practical Deep Reinforcement Learning Approach for Stock Trading](https://mlsanity.com/paper/1811.07522/) (2018)
- [Deep Reinforcement Learning for Automated Stock Trading: An Ensemble Strategy](https://mlsanity.com/paper/2511.12120/) (2025)
- [Learning the Market: Sentiment-Based Ensemble Trading Agents](https://mlsanity.com/paper/2402.01441/) (2024)

## Abstract (arXiv)

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.