by Glaser, Markus, Schmitz, Philipp, Weber, Martin
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Suggested foundations for text and language models in finance and financial time series. Specialist prerequisites vary by paper.
Understand how text is converted into numerical inputs.
Check whether labels measure the financial construct of interest.
Check whether a relationship can be estimated consistently over time.
Read the fitted relationship and its residuals.
Test whether a text-derived signal survives an honest financial evaluation.
Measure agreement when constructing or checking labels.
Study long-run relationships without confusing them with correlation.
Choose a reproducible strategy, specify the trading rule, and test what remains after costs and estimation uncertainty.