Sentiment Analysis & Predictive Analytics for trading. Avoid this systematic mistake

Many common mistakes can be avoided when testing sentiment data for predictive properties. The term "prediction" is not a legal definition. In assessing the predictive qualities of sentiment data there are no rules for what counts as a signal to be tested for predictive properties with regard to financial assets. However, the method you chose ultimately defines what you mean with the term "prediction". To illustrate the point: Using a more prudent definition of the term, the accuracy in the world's most famous prediction study could have been as low as 47% (7 out of 15) instead of 87% (13 out of 15%). An accuracy rate of 47% would not have produced worldwide media attention and more than 1600 academic citations, in my view.