DEFINITION of 'Golden Hammer'

An excessive dependence upon a specific tool to perform all sorts of functions. The golden hammer principle states that given a specific tool to use, all of the world looks like an appropriate place to use that tool. For example, a small child that is given a hammer may regard everything around him or her as a nail.

BREAKING DOWN 'Golden Hammer'

The golden hammer is also known as Maslow's Hammer or the Law of the Instrument. It was first voiced by Abraham Kaplan in 1964 and then widely disseminated in Abraham Maslow's book "The Psychology of Science" in 1966. The idea has also been attributed to Mark Twain, despite the lack of evidence to that effect. In business, it refers to an overdependence on a tried and true strategy or instrument, when another approach may be more suitable.

RELATED TERMS
  1. Hammer

    A price pattern in candlestick charting that occurs when a security ...
  2. Golden Rule

    The Golden Rule, as it pertains to government spending, stipulates ...
  3. Golden Bungee

    A benefit conferred to select top executives that is a combination ...
  4. Golden Cross

    A crossover involving a security's short-term moving average ...
  5. Golden Parachute

    Substantial benefits given to a top executive (or top executives) ...
  6. Hammering

    The rapid and concentrated sale of a stock thought to be overvalued ...
Related Articles
  1. Trading

    What a Golden Cross Might Mean

    Many technicians see a golden cross as a sign that a stock’s value is headed higher. If a stock’s performance continues to lag, and no golden cross appears, its moving averages will remain roughly ...
  2. Financial Advisor

    Investing After the Golden Age

    How can advisors manage client expectations now that the "Golden Age" of investing is over?
  3. Investing

    Forex Investing: How To Use The Golden Cross

    Many currency traders know about the golden cross, but most don't utilize it. Learn how you can profit from this FX trend indicator.
  4. Trading

    Candlesticks Light The Way To Logical Trading

    Crowd psychology is the reason this technique works. Find out how to make it work for you.
  5. Financial Advisor

    Online Tools to Help Make Retirement Savings Last

    These online tools can help stretch retirement dollars as far as possible.
  6. Retirement

    Why Online Retirement Planning Tools Could Betray You

    Retirement calculators on the web may paint a dangerously rosy picture of your future, according to new research from Texas Tech University.
  7. Personal Finance

    Teaching Your Child To Be Financially Savvy

    If you start today, you can set your kids up for a lifetime of smart money management.
  8. Taxes

    How To Claim A Dependent On Your Tax Return

    If you are a caregiver, get to know the rules for claiming a dependent before filing your taxes.
  9. Investing

    Taking The Magic Out Of Fibonacci Numbers

    Uncover the history and logic behind this popular trading tool.
  10. Insights

    What Is Equilibrium?

    Equilibrium is a state of balanced supply and demand.
RELATED FAQS
  1. How do I build a profitable strategy when spotting a Hammer pattern?

    Understand how analysts use the hammer candlestick pattern to establish trading strategy to enter and exit the trade and ... Read Answer >>
  2. How effective is creating trade entries after spotting a Hammer pattern?

    Learn the elements of creating an effective trading strategy based on the hammer candlestick pattern for circumstances that ... Read Answer >>
  3. How are Hammer patterns interpreted by analysts and traders?

    Understand the components of the hammer candlestick pattern, and learn how traders and analysts interpret this pattern when ... Read Answer >>
  4. What are the main differences between a Doji and a hammer pattern?

    Identify the differences between doji candles and hammers on a candlestick chart, and learn how traders look at each for ... Read Answer >>
  5. What is "hammering"?

    "Hammering" is a situation where large sale orders are placed against a particular stock because investors believe that the ... Read Answer >>
  6. How do I build a profitable strategy when spotting a Golden Cross pattern?

    Learn the primary trading strategies that traders and market analysts employ when they have identified the occurrence of ... Read Answer >>
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center