Papers for

stock market educators

Papers whose findings have a practical use for this group, as judged from the abstract. Open a paper to read what it means in practice.

Large language models show limits in simulating individual financial trades

Are LLMs Good Financial User Simulators? A Preliminary Study

Abstract: Large language models (LLMs) are increasingly used as user simulators, but their ability to reproduce evolving individual financial decisions remains unclear. We present a preliminary study in a controlled paper-trading environment with 120 volunteers. Participants used non-redeemable virtual funds under real-time market conditions; no real brokerage accounts, real-money positions, or real transaction records were accessed. Given only information available before a prediction cutoff, a simulator predicts the participant's next-trading-day action, traded security, and transaction quantity. We evaluate temporally aligned rolling predictions and compare settings with and without point-in-time market information. Market context improves action and ticker prediction in the controlled ablation, while transaction sizing remains difficult. We also observe systematic behavioral compression: models overproduce hold actions, underpredict sell decisions, and simplify multi-security transactions. These results provide an initial empirical characterization and motivate larger-scale evaluation of individual, temporal, and portfolio-level behavioral fidelity.

Mon 14 SeptArtificial IntelligenceComputers and SocietyHuman-Computer Interaction
The gist
The paper studies how well large language models (LLMs) can mimic people's day-to-day financial trading decisions using virtual money in a fake stock market. The researchers found that these models can better predict what stocks a person will buy or sell when they have current market information. However, the models struggle to guess how many shares will be traded and tend to simplify behaviors, such as waiting too long to sell. These findings help us understand where LLMs succeed and where they fall short in simulating personal finance choices.
Open 2609.15727v1