Dynamic Strategy Optimization for Algorithmic Trading in the Indian Stock Market Using Reinforcement Learning and Sentiment Analysis

Vikram Singh Rathore; Dr.Riya Mukhopadhyay; nil; nil

Dynamic Strategy Optimization for Algorithmic Trading in the Indian Stock Market Using Reinforcement Learning and Sentiment Analysis

Authors: Vikram Singh Rathore, Dr.Riya Mukhopadhyay, nil, nil

Unique Paper ID: 173240
Volume: 11
Issue: 9
PageNo: 2235-2243

Keywords: Algorithmic Trading Reinforcement Learning Sentiment Analysis Technical Indicators Indian Stock Market Machine Learning FinBERT Dynamic Strategy Optimization.

Abstract:
Technical aspects and current market mood have a significant impact on the extremely volatile Indian stock market. Conventional static trading techniques, like Moving Average Crossover, RSI, and MACD-based methods, frequently perform below par since they are unable to adjust to abrupt changes in the market. In order to improve trading performance and decision-making, this study suggests a novel dynamic strategy optimisation framework that combines sentiment analysis and reinforcement learning (RL). Our approach combines sentiment scores obtained from financial news and social media utilising FinBERT with historical market data, such as price and volume indices. Based on sentiment patterns and current market conditions, the machine learning model is trained to assess and choose the trading strategy that performs the best. The system optimises risk-adjusted returns by constantly adjusting trading strategies through the combination of technical and sentiment analysis. Backtesting using actual Indian stock market data is used to evaluate performance, looking at important parameters including maximum drawdown, Sharpe ratio, and total return. The findings show that trading performance is much improved by sentiment integration, particularly during erratic market events such as earnings reporting or budget announcements. This study advances financial technology and intelligent trading systems by offering a scalable, automated method for strategy optimisation.

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ISSN: 2349-6002
Volume: 11
Issue: 9
PageNo: 2235-2243

Dynamic Strategy Optimization for Algorithmic Trading in the Indian Stock Market Using Reinforcement Learning and Sentiment Analysis

Available:https://ijirt.org/Article?manuscript=173240

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