Does Mood Affect Trading Behavior?

53 Pages Posted: 1 Feb 2013 Last revised: 19 Nov 2016

See all articles by Markku Kaustia

Markku Kaustia

Aalto University School of Business

Elias Henrikki Rantapuska

Aalto University

Date Written: November 9, 2012


We test whether investor mood affects trading with data on all stock market transactions in Finland, utilizing variation in daylight and local weather. We find some evidence that environmental mood variables (local weather, length of day, daylight saving and lunar phase) affect investors’ direction of trade and volume. The effect magnitudes are roughly comparable to those of classical seasonals, such as the Monday effect. The statistical significance of the mood variables is weak in many cases, however. Only very little of the day-to-day variation in trading is collectively explained by all mood variables and calendar effects, but lower frequency variation seems connected to holiday seasons.

Keywords: mood, seasonal affective disorder (SAD), weather, trading behavior, stock market

JEL Classification: D03, G11, G12

Suggested Citation

Kaustia, Markku and Rantapuska, Elias Henrikki, Does Mood Affect Trading Behavior? (November 9, 2012). SAFE Working Paper No. 4, Available at SSRN: or

Markku Kaustia (Contact Author)

Aalto University School of Business ( email )

P.O. Box 1210
Helsinki, 00100
+3589 4313 8475 (Phone)
+3589 4313 8678 (Fax)

Elias Henrikki Rantapuska

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101

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