Early and accurate diagnosis is crucial for effective treatment and improved outcomes, yet identifying psychotic episodes presents significant challenges due to its complex nature and the varied presentation of symptoms among individuals. One of the primary difficulties lies in the underreporting and underdiagnosis of psychosis, compounded by the stigma surrounding mental health and the individuals' often diminished insight into their condition. Existing efforts leveraging Electronic Health Records (EHRs) to retrospectively identify psychosis typically rely on structured data, such as medical codes and patient demographics, which frequently lack essential information. Addressing these challenges, our study leverages Natural Language Processing (NLP) algorithms to analyze psychiatric admission notes for the diagnosis of psychosis, providing a detailed evaluation of rule-based algorithms, machine learning models, and pre-trained language models. Additionally, the study investigates the effectiveness of employing keywords to streamline extensive note data before training and evaluating the models. Analyzing 4,617 initial psychiatric admission notes (1,196 cases of psychosis versus 3,433 controls) from 2005 to 2019, we discovered that the XGBoost classifier employing Term Frequency-Inverse Document Frequency (TF-IDF) features derived from notes pre-selected by expert-curated keywords, attained the highest performance with an F1 score of 0.8881 (AUROC [95% CI]: 0.9725 [0.9717, 0.9733]). BlueBERT demonstrated comparable efficacy an F1 score of 0.8841 (AUROC [95% CI]: 0.97 [0.9580, 0.9820]) on the same set of notes. Both models markedly outperformed traditional International Classification of Diseases (ICD) code-based detection methods from discharge summaries, which had an F1 score of 0.7608, thus improving the margin by 0.12. Furthermore, our findings indicate that keyword pre-selection markedly enhances the performance of both machine learning and pre-trained language models. This study illustrates the potential of NLP techniques to improve psychosis detection within admission notes and aims to serve as a foundational reference for future research on applying NLP for psychosis identification in EHR notes.