TACO trading profit secrets? Polymarket always bets "no" with a return rate of 12%

During Trump's term, the market learned a unique trading rhythm: first a shake, then a reversal. This pattern is jokingly referred to by Wall Street as “TACO trading.” It's not just a political act, but an opportunity for short-term arbitrage. According to several analysts, using TACO trading can easily yield a profit of 12%. How is this achieved?

What is TACO trading?

TACO trading sounds like a Mexican snack, but it is actually a whimsical trading strategy that refers to Wall Street's perception of Trump's policy style. Its full name is Trump Always Chickens Out, which means “Trump always backs down at the last minute.”

TACO trading is a short-term trading strategy derived from the repetitiveness of Trump policies. Its core logic is:

Trump first made strong statements (for example, threatening to impose high tariffs on China)

Market panic, stock market decline.

A few days later, Trump's attitude softened or changed.

The market has stabilized and even rebounded, with investors taking profits.

This “first intimidate, then retreat” model was common during Trump's term, especially during the Sino-U.S. trade war, becoming an arbitrage opportunity for Wall Street traders.

How to easily profit 12% using TACO trading

Here are 2 ways to profit from TACO trading, purely for statistical analysis and not representing any investment advice.

Short the index, buy back in 5 days

According to Nomura Holdings strategist Charlie McElligott's research in June, if you short the S&P 500 futures every time Trump escalates trade war rhetoric and then buy back after 5 trading days, you could achieve a 12% return since early February.

Always bet “no” with Polymarket

Another simpler method is to bet through Polymarket. Bloomberg columnists Carolyn Silverman and Timothy L. O’Brien studied over 300 markets related to actions directly initiated by Trump from his inauguration day to September 30, covering a variety of bets on tariffs, whether cabinet members will be fired, which executive orders will be signed, and more. On the opening day of each market, bettors estimated the average probability of occurrence to be 34%. However, the actual probability was only 28%.

They came to a simple conclusion: always bet “no.” Betting that Trump will take no action will yield a 12% return, while continually betting “yes” will incur a 20% loss of funds.

This article TACO trading profit tips? Polymarket always bets “no” with a return rate of 12%, first appeared in Chain News ABMedia.