{"ID":2886710,"CreatedAt":"2026-06-01T04:54:23.091178241Z","UpdatedAt":"2026-06-01T04:54:23.091178241Z","DeletedAt":null,"paper_url":"https://arxiv.org/abs/2508.02089","arxiv_id":"2508.02089","title":"Leveraging Social Media Sentiment for Predictive Algorithmic Trading Strategies","abstract":"This study investigates how social media sentiment derived from Reddit comments can be used to enhance investment decisions in a way that offers higher returns with lower risk. Using BERTweet we analyzed over 2 million Reddit comments from the subreddit r/wallstreetbets and developed a Sentiment Volume Change (SVC) metric combining sentiment and comment volume changes, which showed significantly improved correlation with next-day returns compared to sentiment alone. We then implemented two different investment strategies that relied solely on SVC to make decisions. Back testing these strategies over four years (2020-2023) our strategies significantly outperformed a comparable buy-and-hold (B\u0026H) strategy in a bull market, achieving 70% higher returns in 2023 and 84.4% higher returns in 2021 while also mitigating losses by 4% in a declining market in 2022. Our results confirm that comment sentiment and volume data derived from Reddit can be effective in predicting short-term stock price movements and sentiment-powered strategies can offer superior risk-adjusted returns as compared to the market, implying that social media sentiment can potentially be a valuable investment tool.","short_abstract":"This study investigates how social media sentiment derived from Reddit comments can be used to enhance investment decisions in a way that offers higher returns with lower risk. Using BERTweet we analyzed over 2 million Reddit comments from the subreddit r/wallstreetbets and developed a Sentiment Volume Change (SVC) met...","url_abs":"https://arxiv.org/abs/2508.02089","url_pdf":"https://arxiv.org/pdf/2508.02089v1","authors":"[\"Gatik Goyal\",\"Sharvil Phadke\",\"Arnav Sharma\",\"Huifang Qin\"]","published":"2025-08-04T05:56:21Z","proceeding":"cs.SI","tasks":"[\"cs.SI\"]","methods":"[]","has_code":false}