Financial encyclopedia

Recently, an interesting buzzword "TACO" has emerged in the financial market. On the surface, it seems like a Mexican wrap, but there are two interpretations of TACO in the market, one from the perspective of political behavior and the other from the perspective of trading techniques.

TACO 1: Trump Always Chickens Out

This is a political observation, indicating that Trump often "talks hard but does little".

He is accustomed to giving hints: raising tariffs, firing officials, launching trade wars, causing market panic. But in the end, it changed its tune, postponed, and even withdrew, leading to a market rebound.

Some investors take advantage of this "fall first, then rise" rhythm for short-term deployment, and the market thus jokingly calls it "TACO Trade".

TACO 2: Trump-Activated Conditional Orders

Many high-frequency trading systems scan news and social media in real time. Once they detect words like "Powell", "tariff", or "fire", they automatically place orders, causing the market to fluctuate instantly.

Because Trump's remarks frequently touch upon policies and the market, they have become highly sensitive signals for program trading in a disguised way. This phenomenon is also known as "TACO trading".

The common points of the two tacos

Although the starting points are different, they essentially reflect the same market phenomenon:

Speech is the trigger

Whether the policy is implemented or not, a single word from Trump is enough to trigger market fluctuations.

Reactions precede facts.

Both humans and programs tend to act first and then verify, causing excessive short-term fluctuations in prices.

The market has established expectations

Investors have become accustomed to Trump's "talk a lot, act little" style and have adjusted their strategies accordingly.

How should investors make their arrangements?

Be vigilant against the risk of price chasing

The turmoil caused by Trump's remarks is mostly unrelated to the fundamentals. Do not enter the market blindly.

Short-term trading can take advantage of volatility

If one can identify excessive market sentiment, they can wait for an opportunity to act after the market stabilizes.

For the long term, one should focus on the trend

Short-term fluctuations are prone to dispersion. A prudent strategy should still focus on fundamentals and the medium - to long-term direction.

The contemporary market is not only driven by economic data, but language, emotions, and program logic also dominate the rhythm. The true investment advantage is not merely about understanding charts, but about grasping behavior and timing.