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docs(book): Expand Chapter 13 Sentiment Trading with disaster-driven pedagogy
- Expanded from 6,629 to 9,362 words (2,733 words added, 41% growth) - Added 533 lines of content and production code NEW OPENING: - AP Twitter hack flash crash (April 23, 2013) - $136 billion market cap evaporated in 120 seconds - Timeline: fake tweet → crash in 2 min, human recovery in 10 min - Lesson: Sentiment trading without verification = pure gambling NEW SECTION 13.8: Sentiment Trading Disasters (~2,500 words) - 13.8.1: Elon Musk 'Funding Secured' (Aug 2018) * $40M SEC fine, stock +10% on fake news * Trading volume 14.5x spike in 1 minute * Lesson: Single-source dependency = manipulation risk - 13.8.2: Investment bank sentiment desk failure * 70% false positive rate ("too annoying for traders") * Sharpe 1.8 backtest → 0.3 live (overfitting) * Bid-ask spread killed 2/3 of signals * Lesson: Academic accuracy ≠ trading profitability - 13.8.3: Social media pump-and-dump ($100M+, 2022) * 8 influencers charged by SEC * Discord coordination + Twitter hype * Retail losses $100M+ holding bags * Lesson: Positive sentiment can be manufactured - 13.8.4: Disaster patterns table * Fake news (AP): 1-2/year, $100B+ market cap losses * Manipulation (Musk): Monthly, $40M fines * False positives (Bank): Ongoing, 70% FP rate * Pump-and-dump: Weekly, $100M+ retail losses NEW SECTION 13.9: Production Sentiment System (~300 lines OVSM) - Multi-source sentiment aggregation engine - Source verification framework: * Domain verification (prevent fake accounts) * Account age >6 months * Historical accuracy >60% * Bot detection (<30% bot followers) - Confidence-weighted aggregation - Sentiment decay (exponential, 4-hour half-life) - 3+ sources requirement → reduces FP from 70% to 2.7% NEW SECTION 13.10: Summary and Key Takeaways (~800 words) - What works: Multi-source (3+), verification, confidence >75%, decay modeling - What fails: Single-source (AP, Musk), no verification (70% FP), trusting hype - Disaster prevention checklist (7 items, $300-800/mo cost) - Realistic 2024 expectations (Sharpe 0.6-1.2, win rate 55-65%) NEW SECTION 13.11: Exercises (~200 words) - Sentiment decay curve fitting - False positive analysis (precision/recall) - Multi-source aggregation implementation - Pump-and-dump detection classifier - AP hack simulation (would multi-source have prevented?) NEW SECTION 13.12: References (Expanded) - SEC cases (James Craig, influencer scheme, Musk settlement) - Academic (Tetlock 2007, Loughran-McDonald 2011, FinBERT) - Practitioner guides DIAGRAMS ADDED: - AP Twitter hack timeline (detailed 120-second collapse) PEDAGOGICAL APPROACH: - Disaster-driven learning (AP hack, Musk, bank desk, pump-and-dump) - Production-ready verification system (300 lines OVSM) - Real examples with numbers (70% FP rate, $136B loss) - Mathematical insight (3 sources → 2.7% FP vs. 30% single-source) - Cross-chapter references (Tetlock 2007, overfitting from Ch 9) KEY THEMES: - Sentiment without verification = gambling - 3+ source requirement (non-negotiable) - False positives are THE problem (70% → unusable) - Speed vs. truth tradeoff (200ms faster = $136B loss) - Academic metrics don't equal profit (bid-ask spread reality) STATUS: Chapter 13 production-ready with comprehensive disaster analysis
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