Can Large Language Models Execute Parent Orders?
Not on the map. Why?
Abstract (arXiv)
Parent-order execution is a core problem in algorithmic trading, where the goal is to split a large order into smaller orders while reducing execution costs. Existing approaches either rely on pre-specified market assumptions that may not hold in practice, or require task-specific training that limits adaptability to new settings. To overcome these limitations, we present the first systematic study of large language models (LLMs) for parent-order execution. This extends the use of LLMs in finance from what to trade to how to execute. We propose PACE (Plan-Ahead Controlled Execution), a hierarchical framework that decomposes parent-order execution into long-horizon planning and short-horizon execution, requiring neither explicit market assumptions nor task-specific training. Experiments on Shenzhen Stock Exchange Level-1 data show that PACE outperforms TWAP, Almgren-Chriss, and learning-based baselines, exceeding the strongest baseline by 0.65 bps. Behavioral analysis reveals that LLMs make execution decisions differently from human investors: higher model confidence predicts better performance rather than worse returns, and the model trades earlier rather than procrastinating toward the deadline. These findings suggest that LLMs can complement human traders in execution decisions.
Key facts. No citing papers in the map yet (data through 7 Oct 2026). Builds on 14 of its 41 references that are in the map. First posted on arXiv 30 Jul 2026.
Builds on
14 of 41 references.
References · 14
- 2016XGBoost: A Scalable Tree Boosting Systemcited by 5,120
- 2023BloombergGPT: A Large Language Model for Financecited by 923
- 2026DeepSeek-V4: Towards Highly Efficient Million-Token Context Intelligencecited by 877
- 2023PIXIU: A Large Language Model, Instruction Data and Evaluation Benchmark for Financecited by 217
- 2023FinMem: A Performance-Enhanced LLM Trading Agent with Layered Memory and Character Designcited by 163
- 2022WHEN FLUE MEETS FLANG: Benchmarks and Large Pre-trained Language Model for Financial Domaincited by 117
- 2025TwinMarket: A Scalable Behavioral and Social Simulation for Financial Marketscited by 46
- 2018Double Deep Q-Learning for Optimal Executioncited by 39
- 2021Universal Trading for Order Execution with Oracle Policy Distillationcited by 29
- 2025Kronos: A Foundation Model for the Language of Financial Marketscited by 25
- 2020Deep Stock Trading: A Hierarchical Reinforcement Learning Framework for Portfolio Optimization and Order Executioncited by 20
- 2026QuantaAlpha: An Evolutionary Framework for LLM-Driven Alpha Miningcited by 12
Built on by
Not cited yet.