Goal Gradient Effect

I never thought I would ever use anything from my college psychology courses, but I will draw on one interesting concept I will never forget. The Goal Gradient Effect, in short, says that when the end is nigh, people are motivated to go faster.

In the aviation world, we call this “get home-itis.” I first encountered this when I was flying my plane from Sandusky, Ohio, back to Buffalo, New York. My son and I took off in a hurry to beat the storm that was heading our way, so we quickly ran through the checklists. We took off, dark clouds heading our way, and then my young son, Alex, got visibly upset when his door flew open. He quickly grabbed the handle while I contemplated reaching over, opening it further and slamming it shut. But then I thought, if this fails, we’re in trouble with relatively little altitude. We certainly don’t need a stall at 1,000 feet. Instead, we returned to land.

Thankfully, one of the other pilots came out and chastised me for being in a hurry. Get home-itis is real and can be deadly if you fail to properly execute your procedures, in this case, carefully reviewing my checklists and slowing down a bit to make sure we’re well covered. He highly recommended we wait out the storm instead of tempting fate into a potentially dangerous situation. In hindsight, the decision to return to the airport was probably very wise. Once it had passed, our flight back was stress-free and non-eventful. Incidentally, my son went on and earned his pilot’s license as well.

This concept also affects bone-weary marathoners to spring the home stretch. They pace themselves throughout the race, but when the end is near, they ramp up their efforts to reach the finish line quickly. I half-jokingly say this is likely the reason ambulances stay positioned near the finish line, to collect the felled bodies as they push themselves over the limit.

Goal gradient effect also applies to trading. As an example, we are currently working on a project to turn $5,000 into $50,000 by the end of the year using our proven strategies. Here it is, mid-September, and we are within a couple thousand dollars of our goal. The natural tendency now is to hurry and finish it. I feel the urge to quickly enter a position soon on market open, bypassing some important markers we need to hit before making our purchase. Any carelessness now can be extremely costly. I remind our traders that this is the time to be extra careful, lest the project goes south because we failed to follow protocol.

As you embark on a plan to reach certain targets, understand that these are self-imposed goals, and it really does not matter if you hit them today or tomorrow. The idea is to attain your objective, locking down your profits. Resist the temptation to “run the extra mile full speed.” The market will still be there tomorrow, the next day and the day after that.

Our Trading Room discusses these and other topics on a daily basis. We keep you grounded and on track to earn profits consistently. Assuming your intent is to become a long-term great trader, we invite you to join Jon and me, every morning, 9:20 to 10:30 a.m. ET. Click the link for details.

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Just starting out? Join the Inner Circle for our Morning Market Analysis. We analyze the day’s events, offering our seasoned opinion as to market direction and strength. Furthermore, we send you a late day follow-up report.

The goal gradient effect: it’s real and can destroy the dreams of those unaware! The closer you are to the end, the more you need to take extra precautions.