Understanding the Effects of NLP-Based Trading Algorithms

Understanding the Effects of Natural Language Processing-Based Trading Algorithms 

Present-day financial markets are dominated by fully automated computer algorithms which can send orders to buy or sell stocks at a fraction of a second. Increasingly, these algorithms make use of social media messages (such as tweets) to predict price movements, deploying so-called “natural language processing” (NLP) models to this end. Combining insights from computer science and the sociology of financial markets, the aim of this project is to understand the inner workings of NLP-based trading algorithms and how they may affect markets and market stability.