News Trading With Prop Firms: Rules, Strategies & Restricted Events

News trading — placing trades around high-impact economic releases — is one of the most profitable but controversial activities in prop trading. Some firms welcome it, others restrict it, and a few ban it entirely. Understanding where your firm stands is essential before you even consider a news-based strategy.

The core issue from the firm's perspective is risk concentration. During major news events like Non-Farm Payrolls (NFP) or FOMC rate decisions, markets can move 50-200 pips in seconds. A trader who loads up on maximum position size before NFP is essentially placing a binary bet — they will either make a massive profit or suffer a massive loss. Firms that have many traders doing this simultaneously face concentrated risk that can be difficult to hedge.

Why firms restrict news trading: 1. Liquidity gaps during news events make hedging difficult for the firm 2. Slippage can cause losses beyond the trader's stop loss, creating counterparty risk 3. The statistical profile of news trades (high variance, low frequency) is harder to evaluate than consistent intraday trading 4. Some news strategies exploit the firm's execution infrastructure rather than genuine market edge

Despite these concerns, many firms allow news trading because it is a legitimate strategy with genuine edge when done correctly. The key is understanding which firms allow it and under what conditions.

The rules vary significantly between firms and have changed frequently as the industry evolves. Here is the current landscape as of 2026.

Firms that allow news trading with no restrictions: - Apex Trader Funding: No restrictions on news trading during evaluation or funded accounts - Topstep: No explicit news trading restrictions. Trade any event at any size within your position limits - The5ers: News trading allowed on all account types

Firms with partial restrictions: - FTMO: News trading is allowed, but trades opened within 2 minutes before or after high-impact news events may not be counted toward your profit target during the evaluation. On funded accounts, there are no restrictions. This rule is designed to prevent pure news gambling during the evaluation phase. - FundedNext: Similar to FTMO — restrictions during evaluation only, based on specific high-impact events

Firms that restrict or ban news trading: - Some smaller firms prohibit opening new positions within 5-15 minutes of high-impact events. Check your specific firm's terms.

Important distinction: Most firms restrict opening new positions around news, not holding existing positions. If you entered a trade 2 hours before NFP and it is still open when the release hits, that is typically allowed. The restriction is on new entries timed specifically to the event.

Check before you trade: Rules change frequently. Always verify your firm's current news trading policy in their terms of service before implementing a news-based strategy. A rule violation, even if unintentional, can result in account termination.

Not all news events are created equal. Understanding which releases generate the most volatility helps you plan your news trading strategy — or plan to stay flat.

Tier 1 — Maximum Volatility (50-200+ pip moves): - Non-Farm Payrolls (NFP): Released first Friday of every month at 8:30 AM ET. The single highest-volatility regularly scheduled release. EUR/USD can move 100+ pips in the first minute. - FOMC Rate Decisions: Eight times per year. The initial move can be 50-150 pips, followed by additional volatility as the press conference unfolds over the next hour. - CPI (Consumer Price Index): Monthly release that has become increasingly market-moving since 2022 due to inflation focus.

Tier 2 — High Volatility (30-80 pip moves): - ECB Rate Decisions and press conferences - Bank of England rate decisions - GDP releases (US, Eurozone, UK) - PPI (Producer Price Index) - Retail Sales (US)

Tier 3 — Moderate Volatility (15-40 pip moves): - PMI releases (ISM Manufacturing, Services) - Unemployment Claims (weekly) - ADP Employment (monthly) - Trade Balance

For futures traders: ES, NQ, and gold futures are most affected by US releases. CL (Crude Oil) is additionally affected by EIA inventory reports (Wednesdays at 10:30 AM ET) and OPEC announcements.

Maintain an economic calendar and mark Tier 1 and Tier 2 events at the start of each week. PropJournal integrates with economic calendars so you can see upcoming events alongside your trading schedule and plan your sessions accordingly.

If your firm allows news trading, these are the strategies with the best risk-adjusted returns for prop firm environments.

Strategy 1: Pre-News Positioning (Lowest Risk) Enter a position 30-60 minutes before the news release based on technical analysis of the current trend. Set a stop loss and take profit before the event. The idea is that the pre-event move (positioning by institutional traders) often telegraphs the direction. If the news confirms the trend, your position profits. If it reverses, your stop loss limits the damage. Risk: 0.5% of account. This strategy works because you are trading the technical setup, not the news itself.

Strategy 2: Post-News Fade (Moderate Risk) Wait for the initial news spike to complete (typically 5-15 minutes after the release). Identify the extreme of the spike and enter a counter-trend position. News releases often overshoot in the initial reaction, then retrace 40-60% of the move. Your stop loss goes beyond the spike extreme, and your take profit is at the 50% retracement level. Risk: 0.5-0.75% of account.

Strategy 3: Post-News Continuation (Moderate Risk) Wait 15-30 minutes after the release for the dust to settle. If the initial move has held and price is consolidating near the new level, enter in the direction of the move. This is the safest news strategy because you are trading after the volatility has subsided, with confirmation that the move is genuine. Risk: 0.75% of account.

Strategy to avoid: Straddle (High Risk) Placing pending orders above and below the current price to catch the move in either direction. This looks good on paper but in practice, slippage during news events means both orders often get filled (the initial spike hits one, the reversal hits the other), resulting in double losses. This is how traders blow daily limits during news.

News trading requires modified risk management because the normal rules of stop loss execution do not always apply. Slippage, gaps, and spreads all increase dramatically during high-impact events.

Slippage reality: During NFP, your stop loss at 1.0850 on EUR/USD might get filled at 1.0835 — 15 pips of slippage. On NQ futures, a 10-point stop might get filled 20-30 points away during FOMC. Your position size must account for worst-case slippage, not just the distance to your stop loss.

The slippage-adjusted position size formula: Adjusted Risk = Stop Loss Distance + (Expected Slippage × 2) Position Size = Dollar Risk / (Adjusted Risk × Pip Value)

Example: You want to risk $500 on EUR/USD with a 20-pip stop and expected 10-pip slippage: Adjusted Risk = 20 + (10 × 2) = 40 pips Position Size = $500 / (40 × $10) = 1.25 lots (instead of 2.5 lots without slippage adjustment)

Spread widening: Forex spreads can widen from 1 pip to 10-20 pips during major news. Futures spreads widen less dramatically but still increase. A wide spread can trigger your stop loss immediately after entry, even if price does not actually move against you.

Position size reduction: Regardless of strategy, reduce your standard position size by 50% for any trade placed within 30 minutes of a Tier 1 event. The increased volatility means your standard risk percentage represents more potential loss due to slippage and gaps.

Maximum exposure rule: Never risk more than 1% of your account on any single news-related trade. This applies to both the evaluation and funded accounts. A 2% loss from a single slippage event can destroy days of careful progress.

Successful news traders do not react to events — they plan for them days in advance. A well-maintained news trading calendar is the foundation of a disciplined news trading practice.

Weekly planning (Sunday evening): Review the upcoming week's economic calendar. Identify all Tier 1 and Tier 2 events. For each event, decide one of three things: 1. I will trade this event (specify the strategy and position size) 2. I will be flat before this event (close all positions 15 minutes prior) 3. This event does not affect my instruments (no action needed)

Daily planning (pre-session): Confirm today's events and their exact release times. Set alerts 30 minutes before each relevant event. Review the consensus forecast and previous reading — understanding what the market expects helps you gauge whether the actual release is a surprise.

Key calendar sources: - ForexFactory (free, comprehensive) - Investing.com economic calendar (free, with consensus forecasts) - Bloomberg terminal (paid, institutional-grade) - Your broker's built-in calendar

Events to always be flat for (if you are not a news trader): If news trading is not part of your strategy, these are the events where you should have zero open positions. The risk of holding through them outweighs the opportunity cost of closing early: 1. FOMC rate decisions and press conferences 2. NFP releases 3. CPI releases 4. ECB rate decisions 5. Any Tier 1 event for the currency or instrument you are trading

Log your news-related decisions in PropJournal. Over time, you will build a dataset showing which events your strategy handles well and which ones consistently cause losses. This data allows you to refine your news trading calendar to focus only on the events where you have demonstrated edge.

News trading mistakes in prop firms are more costly than in retail accounts because you cannot recover from a blown evaluation or funded account by depositing more money. Avoid these common errors.

1. Not checking your firm's news trading rules before trading. This seems obvious, but traders regularly violate news restrictions they did not know existed. FTMO's 2-minute window around high-impact events catches traders who place trades at 8:29 AM before an 8:30 AM release. Read your firm's rules thoroughly and verify them before any news-related trade.

2. Using standard position sizes during news events. Normal position sizing assumes normal market conditions — reasonable spreads, predictable slippage, and liquid order books. None of these apply during major news releases. Traders who use their standard 1% risk during NFP can easily lose 2-3% when slippage and spread widening are factored in.

3. Trading every news event. There are 15-20 economic releases per week across major currencies. Trading all of them is overtrading disguised as a strategy. Focus on 2-3 events per month where you have a clear statistical edge and ignore the rest.

4. Holding through unexpected events. Geopolitical events, emergency central bank meetings, and surprise announcements cannot be predicted by any calendar. Always have a stop loss in place — even on positions that are deep in profit. A flash crash or surprise announcement can move markets 200+ pips in seconds.

5. Ignoring the post-news environment. The 2-4 hours after a major news release often feature increased volatility and choppy price action as the market digests the information. If you did not trade the news itself, consider waiting until the next day to trade. Taking your normal setups in a post-news environment is like driving your normal route during a thunderstorm — it is technically possible, but the conditions are not what your strategy was designed for.

Use PropJournal's trade tagging to label all news-related trades. Compare your news trade performance to your non-news performance. If news trades are not clearly more profitable, they are adding risk without adding return — and you should stop taking them.