Policy Gradients refer to a class of reinforcement learning algorithms that directly learn a parameterized policy function, which maps states to actions. They optimize the policy’s expected return through gradient ascent.
Mechanism
In smart crypto trading, a policy gradient agent directly learns optimal trading actions, such as buying, selling, holding, or specifying order quantities, based on observed market states. It adjusts its parameters to maximize long-term portfolio value or minimize risk.
Methodology
Implementation involves algorithms like REINFORCE or Actor-Critic methods, where the policy’s parameters are updated iteratively using gradients derived from sampled returns. This approach enables the system to discover complex trading strategies that adapt to dynamic market conditions without explicit value function estimation.
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