English

Can Blindfolded LLMs Still Trade? An Anonymization-First Framework for Portfolio Optimization

Machine Learning 2026-03-19 v1 Artificial Intelligence Computational Finance Portfolio Management

Abstract

For LLM trading agents to be genuinely trustworthy, they must demonstrate understanding of market dynamics rather than exploitation of memorized ticker associations. Building responsible multi-agent systems demands rigorous signal validation: proving that predictions reflect legitimate patterns, not pre-trained recall. We address two sources of spurious performance: memorization bias from ticker-specific pre-training, and survivorship bias from flawed backtesting. Our approach is to blindfold the agents--anonymizing all identifiers--and verify whether meaningful signals persist. BlindTrade anonymizes tickers and company names, and four LLM agents output scores along with reasoning. We construct a GNN graph from reasoning embeddings and trade using PPO-DSR policy. On 2025 YTD (through 2025-08-01), we achieved Sharpe 1.40 +/- 0.22 across 20 seeds and validated signal legitimacy through negative control experiments. To assess robustness beyond a single OOS window, we additionally evaluate an extended period (2024--2025), revealing market-regime dependency: the policy excels in volatile conditions but shows reduced alpha in trending bull markets.

Keywords

Cite

@article{arxiv.2603.17692,
  title  = {Can Blindfolded LLMs Still Trade? An Anonymization-First Framework for Portfolio Optimization},
  author = {Joohyoung Jeon and Hongchul Lee},
  journal= {arXiv preprint arXiv:2603.17692},
  year   = {2026}
}

Comments

Accepted at the ICLR 2026 Workshop on Advances in Financial AI (FinAI). 18 pages, 7 figures

R2 v1 2026-07-01T11:26:07.684Z