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

We introduce <sc xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">FinMem</small>, a novel Large Language Models (LLM)-based agent framework for financial trading, designed to address the need for automated systems that can transform real-time data into executable decisions. <sc xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">FinMem</small> comprises three core modules: Profile for customizing agent characteristics, Memory for hierarchical financial data assimilation, and Decision-making for converting insights into investment choices. The Memory module, which mimics human traders' cognitive structure, offers interpretability and real-time tuning while handling the critical timing of various information types. It employs a layered approach to process and prioritize data based on its timeliness and relevance, ensuring that the most recent and impactful information is given appropriate weight in decision-making. <sc xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">FinMem</small>'s adjustable cognitive span allows retention of critical information beyond human limits, enabling it to balance historical patterns with current market dynamics. This framework facilitates self-evolution of professional knowledge, agile reactions to investment cues, and continuous refinement of trading decisions in financial environments. When compared against advanced algorithmic agents using a large-scale real-world financial dataset, <sc xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">FinMem</small> demonstrates superior performance across classic metrics like Cumulative Return and Sharpe ratio. Further tuning of the agent's perceptual span and character setting enhances its trading performance, positioning <sc xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">FinMem</small> as a cutting-edge solution for automated trading.