05. Exercise 2: RL Componenets in Finance
This problem is designed to help you understand the basic components of reinforcement learning from a financial perspective.
Scenario Definition: Above, we depict a simple learning environment for financial reinforcement. Imagine there is a trading bot who is trying to make a profit by trading this stock. We want to use three sources of information in this environment - the stock close price, the 20-day moving average of the stock close price, and the volume of stocks being traded.
Objective: Your task is to identify the main reinforcement learning components for the above-case scenario.
Agent:
Who is the agent in this scenario?
State Representation:
What information could be included in the state for the agent to make informed decisions? Describe the components of the state.
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Action Space:
List the possible actions the agent can take in the environment.
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Reward:
Define the rewards that will guide the agent’s behavior. Specify the rewards for each action.