Wall Street's TACO trade gains momentum amid stock market rally
Wall Street is learning how to trade in the new normal environment.
Whether you are bullish, bearish, or indifferent, there's one thing every person involved in the stock market hates — volatility.
This is true whether you are a seasoned investor who buys to hold stocks and invest in them, or a day trader making dozens of daily transactions.
During his second term, President Donald Trump's economy has been defined by volatility. The charts for the S&P 500, Dow Jones, and Nasdaq indexes are starting to look a lot like Bitcoin charts, with wild 700-point swings either way.
Related: Donald Trump wants a Golden Dome; this company could win big
But swimmers swim, shooters shoot, and investors trade.
So, despite the market's current volatility, investors are finding ways to profit from it.
While strategies vary, one group of investors relies on a simple mantra to make money and take advantage of the poker face behind the man causing all of the volatility, President Trump. 
Investors turn to TACO trades to navigate volatile market
The new trade sweeping Wall Street is called a “TACO“ trade. TACO stands for “Trump Always Chickens Out.“
The term was reportedly first coined by Financial Times writer Robert Armstrong, who noticed a pattern that could help investors.
A TACO trade goes like this:
Donald Trump goes on social media and unexpectedly announced a 25% tariff on steel and aluminum imports. Stocks tied to steel and aluminum immediately nosedive, only to reverse course when Trump changes his mind weeks later.
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Shrewd investors have noticed this pattern. Just this week, the Dow Jones Industrial Average jumped 700 points after Trump announced that he was extending the deadline for the U.S. and EU to work out a trade deal just days after he announced tariffs were coming.
So if Trump announces a big sweeping economic policy, its best not to overreact — because TACO.
Trump himself was asked about this phenomenon Wednesday, but he disagreed with the premise.
“I’ve never heard that. You mean because I reduced China from 145 percent that I set down to 100, and then down to another number, and I said you have to open up your whole country?” Trump said. “And because I gave the European Union a 50 percent tariff and they called up and said, ‘Please let’s meet right now.’”
“You call that chickening out?” Trump said, according to The Hill.
Stocks have been on fire this week, rallying thanks, in part, to new developments in tariffs.
Trump reverses course yet again on tariffs
President Donald Trump has said in the past that he loves everything about tariffs. Even the word "tariff" is one of his favorites in the dictionary, he claims.
However, his implementation of these import taxes has showcased his love-hate relationship with the concept.
On May 26, the president announced extending the deadline to implement 50% tariffs on the EU to July 9 from July 1. This announcement came just three days after Trump initially announced the tariffs.
If the U.S. and EU fail to reach an agreement, Bloomberg Economics calculations show that a price hike of more than 0.3% could affect $321 billion worth of U.S.-EU goods trade.
Trump has extended deadlines with other trade partners before, and earlier this month, the administration declared its most significant trade victory yet when it announced that it reached an outline for a trade deal with the United Kingdom.
Related: UK trade deal gives car buyers a glimpse of what the future holds
