FinSMART: Financial Sentiment Analysis for Algorithmic Trading through Market-Aligned Reinforcement Learning
On the map: Deep reinforcement learning methods → Adversarial robustness and RL in finance
Abstract (arXiv)
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.
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 9 of its 18 references that are in the map. First posted on arXiv 30 Jul 2026.
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9 of 18 references.
References · 9
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- 2025FinRLlama: A Solution to LLM-Engineered Signals Challenge at FinRL Contest 2024
- 2024Learning the Market: Sentiment-Based Ensemble Trading Agents
- 2024Aligning LLMs with Human Instructions and Stock Market Feedback in Financial Sentiment Analysis
- 2023PRUDEX-Compass: Towards Systematic Evaluation of Reinforcement Learning in Financial Markets
- 2026FinRL-X: An AI-Native Modular Infrastructure for Quantitative Trading
- 2025Adaptive Financial Sentiment Analysis for NIFTY 50 via Instruction-Tuned LLMs , RAG and Reinforcement Learning Approaches