RL in trading / finance — techniques.

hard

Answer

$(1) Portfolio optimization: policy allocates capital across assets.$
$(2) Market making: bid/ask spread policy.$
$(3) Options hedging: dynamic hedging via RL.$
$Challenges: (1) non-stationary markets.$
$(2) Extremely low signal-to-noise.$
$(3) Adversarial (other traders learn).$
$(4) Backtesting can't capture real market impact.$
$Modern practice: careful backtest + shadow trading + tiny position sizes early.$
$Most quantitative funds combine RL with classical control + supervised signals.$

Check yourself — multiple choice

Random
Portfolio allocation / market making / hedging; challenges: non-stationary + low SNR + adversarial + backtest limits; industry combines RL + classical + supervised; shadow trading before live
Same as poker
Not real

Finance RL: allocation / MM / hedging; low SNR + adversarial + shadow trading.

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