When AI Trading Agents Compete: Adverse Selection of Meta-Orders by Reinforcement Learning-Based Market Making

arXiv — cs.LGMonday, November 3, 2025 at 5:00:00 AM
A recent study explores how medium-frequency trading agents face adverse selection from high-frequency traders, using reinforcement learning within a Hawkes Limit Order Book model. This research is significant as it sheds light on the dynamics of trading strategies and market behaviors, providing insights that could help improve trading algorithms and market efficiency.
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