‘TACO traders’ edge buy-and-hold investors since start of 2025, analysis finds

• One year on from Liberation Day - IG analysis of three investor profiles shows TACO traders narrowly outperformed buy-and-hold investors

• TACO trading delivered returns of +18.2%, compared with +17.7% for a fully invested approach

• Panic sellers who reacted to volatility by selling portfolio then buying back in saw 1.4% loss

London, March 2026 - Investors attempting to capitalise on tariff-driven market swings - often referred to as ‘TACO traders’ - would have narrowly outperformed those who stayed fully invested since the start of 2025, according to new analysis from investing and trading platform IG.

The study, marking one year since “Liberation Day”, shows that the so-called ‘TACO trade’ - short for ‘Trump Always Chickens Out’- delivered slightly stronger returns than a traditional buy-and-hold strategy. The approach is based on buying into market dips triggered by major political announcements, in anticipation that policies are later softened or reversed, leading to a rebound in markets.

To assess the performance of different investing styles during what has been one of the most turbulent years in recent memory for financial markets, IG modelled three types of investor:

• Buy-and-hold investor: Invested £10,000 in an ISA tracking the S&P 500 on January 1 2025 and stayed invested throughout.
  

• TACO trader: Invested £6,000 in an ISA tracking the S&P 500 on January 1 2025, then deployed the remaining £4,000 in £1,000 tranches, one day after each TACO event listed below commenced (at market open).
  

• Panic trader: Invested £10,000 in an ISA tracking the S&P 500 on January 1 2025, sold investments the day after each TACO event commenced (at market open), and re-entered with their full portfolios when markets recovered. 

From January 1 2025 to March 16 2026, the TACO trader generated a return of +18.2%, compared with +17.7% for the buy-and-hold investor. By contrast, the panic trader significantly underperformed, delivering a return of -1.4%.

The performance gap was most pronounced for investors who reacted to volatility, with panic traders trailing long-term investors and TACO traders by up to 20 percentage points, underlining the potential cost of responding emotionally to turbulent markets.

Table shows market returns for three different investor profiles.  Market performance from January 1 2025 - March 16 2026

Source: Bloomberg. Past performance isn't an indicator of future results. 

The model is based on a series of tariff-driven market shocks and reversals over the past year - Liberation Day, tariff pauses, escalating US-China tariffs, and renewed tariff threats linked to Greenland - each of which triggered sharp declines followed by rapid recoveries.

Chris Beauchamp, Chief Market Analyst at IG said: “Market volatility around tariffs has created clear trading opportunities, and for active traders the TACO trade has become a recognisable pattern. Our analysis shows that it has been possible to outperform the market by buying into these dips but only marginally, and only with consistent timing across multiple events.

“For many investors, that level of precision is difficult to achieve in practice. What the data clearly highlights is the risk of getting it wrong. Investors who reacted to market falls by selling out and waiting for reassurance before re-entering ended up worse off, missing key recovery periods that drive long-term returns.”

All trading involves risk.

-ENDS-

Notes to editors
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About IG Group
IG Group (LSEG:IGG) provides online trading platforms and educational resources to empower ambitious clients around the globe. Headquartered in the UK, IG Group is a FTSE 100 company that offers clients access to c.19,000 financial markets worldwide 

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About the data 

Source: Bloomberg. The data has been collected from January 1st 2025 to March 16th 2026. Raw data remains available upon request.