Armchair investors cautioned on risks of playing Trump tariff market

Mon, Aug 18, 2025, 10:05 AM 2 min read

Amidst the turbulence of stock markets reacting to US President Donald Trump's tariff policies, Dan Buckley, chief analyst at DayTrading.com, has issued a warning to inexperienced online investors about the dangers of attempting to exploit these fluctuations.

Dubbed “armchair investors”, these individuals often trade from the comfort of their homes, managing portfolios within ISAs and self invested private pensions (SIPPs).

These investors have been drawn to the 'Trump tariff strategy', which involves buying stocks at a lower price following tariff announcements, with the expectation that their value will bounce back after the initial market shock.

However, Buckley cautions that this approach is fraught with risk.

"Trump’s repeated tariff rhetoric has turned trade policy into a constant headline driver. It also creates volatility that retail trading platforms thrive on," Buckley explained.

"Tariff speeches and social media posts trigger intraday swings across key sectors, especially across autos, energy and agriculture, which often leads to retail traders trying to scalp moves or use short-term options trades," he further noted.

He highlighted the pitfalls many novice traders face, including being caught out by rapid price movements and incurring losses that exceed their margins.

Despite the allure of quick profits, Buckley stressed the importance of thorough research and a cautious approach when trading based on tariff-induced volatility.

The shockwaves from Trump's tariff announcements have been felt across global markets, with significant drops in major indices like the S&P 500, Nasdaq and Dow Jones following tariff news.

These market movements have been accompanied by spikes in the VIX, or "fear index", and a shift towards traditional safe havens such as gold and US Treasuries.

Buckley pointed out that while these market swings represent a reallocation of capital, they also underscore the value of diversification across different assets, classes, countries and currencies.

Retail trading platforms have experienced a surge in business due to the tariff announcements.

Robinhood, for instance, saw a substantial increase in equity trading volume and options volume in the second quarter of 2025, leading to revenue growth of 45%.

The platform also reported a record $6.5bn in client deposits in April, indicating a heightened interest in trading and investing amidst tariff-related market volatility.

Buckley concluded by emphasising that while volatility can present opportunities, it also poses significant challenges for retail investors, advising caution and due diligence in navigating these uncertain waters.