We may wake up feeling refreshed or tired; we may go into lunch feeling hungry or distracted; we may feel revived in the afternoon, or ready for a siesta; and we may come home refreshed or exhausted after a long day - depending how it went.

Over the course of a day, we may decide to enter a few trades - each time in a certain mood.

The mood elevator

The mood elevator is a term that's thrown around a lot, usually in annoying jokes such as, "Looks like you've got a case of the Mondays! You need to raise your mood elevator!"

International firm Senn Delaney, which is focused on transforming work cultures, has a more serious and helpful definition of the term 'mood elevator'.

At the top of the mood elevator is the higher mood level - including feelings such as resourcefulness, inspiration, energy and curiosity. Lower levels include emotions such as worry, irritation, a feeling of victimisation and overall lowness.

Being at the higher level in the mood elevator is good in that your thinking tends to be clearer. When you're in a better mood, studies show that your IQ and EQ (emotional intelligence) also tend to be higher than average.

On the other hand, lowered mood leads to clouded thinking, excessive judgmental tendencies and unhealthy impatience. This means you're probably making smarter trading decisions when you're at the top of the mood elevator, and bad decisions when you've hit ground floor.

What to do

Senn Delaney outlined five steps to follow in order to keep mood clouding your judgment.

1. Note your state of mind and use your feelings as a guide to the quality of your thinking. Make an obvious effort to constantly check where you are on the mood elevator - make sure unhealthy thoughts aren't recurring.

2. Take care of yourself. Our physical state has an impact on our thinking. If you're tired and warn out, your mood will lower and your thinking will be cloudy. Better physical health leads to strength of mind.

3. Remember low mood equals unreliable thinking. If you're feeling down, this is the important time to check yourself. Try not to make any major decisions; don't make a bunch of trades just to make yourself feel better. If you can't stop yourself from trading, use caution and don't overreact.

4. Sense of humour is key. Sit back at some point during the day, think of what you have to be grateful for, and go over the last few things that have made you laugh. "Laughter is the best medicine" is a cliché we hear a lot, but it's true… think about what a lot of your favourite TV shows are - chances are there are a few comedies in there. Humour and a light mood can help you handle challenges more efficiently.

5. Mood is contagious. Senn Delaney outlines this point in terms of management leadership, but the point behind this last tip is valid: if you are trading amongst other traders, or even while you're at work amongst non-traders, the mood of others can greatly impact you.

Organisational studies show that a company's culture and climate can be something you carry home with you. If it's been a bad day for you at work, try not to let this shadow follow you home.

Trading And Your Moods is a post from: Australian Stock Report Market Pulse Blog