Glossary

Sentiment analysis

Using software to judge whether a piece of text sounds positive or negative.

In plain English

Sentiment tools read news, posts or reports and give each one a score, from very negative to very positive. Traders hope that good-sounding news means rising prices.

Uncle Gary explains

Aunt Linda texts the family group: 'Fine.' A sentiment model reads it as neutral. Everyone in the family knows it means war.

Why it matters for your money

Text that sounds positive and prices that go up are two different things. In our test, how positive the news sounded had no link with what the stock did next.

Where we tested it

Related terms

All glossary terms. Educational content, not financial advice.