So, I have been thinking of dipping my toe into the pool of sentiment analysis for a while now. I made the first positive steps the other day. I found a list of positive and negative words on the internet. I have a Java library that works as a basic dictionary and I have created mini dictionaries of these words. The idea is that I can make some assessment of the sentiment of what people are saying about a share for example and then use this as part of a trading algorithm. People have been doing this for years, but I would like to try it myself. I want to see what the problems, pitfalls, limitations are firsthand. I suspect the key will be making the connection between share price movements and certain key individual’s or group’s sentiment. This is similar to that throw away line in the film The Social Network. Something like, “..he made $300,000 trading oil based on the weather…”. If weather is a key indicator of oil price changes I need to find the equivalent key persons for shares that I am interested in trading. Classic old problem of finding the signal in the noise, and there is a lot of noise.
