From TACO to FOMO: How retail traders turned Trump-driven volatility into a playbook

• Gold has fallen from a record $5,600/oz in January to around $4,500 while oil nearly doubled to $126/barrel on Brent crude, showing a shift from traditional safe-haven assets to energy exposure during geopolitical tensions
• Deutsche Bank's pressure index shows market stress climbed to its highest level in March since Trump's second term began, as investors test how much volatility the administration will tolerate before reversing policy
• Cross-asset whiplash is intensifying as traditional correlations break down, with traders rapidly flipping positions based on headlines while higher oil prices threaten to feed inflation and push bond yields higher

Market Summary: Retail Traders Deploy New Strategies Around Trump Volatility

Key Trading Patterns

Retail investors have developed three distinct trading strategies to navigate President Trump's second-term volatility: "TACO" (Trump Always Chickens Out), "FAFO" (F*** Around, Find Out), and "FOMO" (Fear of Missing Out). These acronyms now feature in everyday trading desk language, according to eToro's global market strategist Lale Akoner.

TACO and FAFO Strategies

The TACO trade involves buying dips after policy announcements, betting Trump will reverse course to avoid economic damage. This pattern emerged after April 2025 tariff announcements that sent global markets down, followed by negotiations and pullbacks. Deutsche Bank's "pressure index" hit its highest level in March since Trump's second term began, combining approval ratings, inflation expectations, equities, and bond yields.

The FAFO trade sees investors absorbing short-term pain expecting policy reversals. The 30-year Treasury yield has become a "pain threshold" indicator—sharp spikes signal when policymakers may moderate their stance.

Commodity Divergence

Gold surged 66% in 2024—the steepest climb since 1979—reaching nearly $5,600/ounce in January 2025 before retreating to $4,500 as investors shifted focus.

Oil has nearly doubled since January, with Brent crude hitting $126/barrel on May 1 following Iran war developments that effectively shut the Strait of Hormuz. Some traders now reference "NACHO" (Not A Chance Hormuz Opens) for oil positioning.

Market Implications

Cross-asset correlations have weakened as investors respond to rapid headline shifts. Higher oil prices threaten to fuel inflation and push yields higher, creating broader cross-asset stress. Traditional safe-haven patterns have broken down as markets favor energy exposure over defensive assets.