Select Prop Firm

What Is News Trading

The news trading rule refers to restrictions set by prop firms that limit or prohibit trading around high-impact economic news events. These rules are most commonly enforced in funded accounts but may also apply during evaluations, depending on the firm. The purpose of the rule is to prevent traders from taking advantage of the extreme volatility and rapid price movement that often occurs during major news releases. News events can create unpredictable spikes, slippage, and rapid reversals, which increase risk for both the trader and the firm.

When and How It Applies

Firms typically define a restricted time window before and after specific scheduled news releases where trading is either prohibited or closely monitored. This window may range from a few minutes up to fifteen or more minutes surrounding the event. The rule may apply to all positions, including open trades, or only to new entries placed within the restricted window. In most cases, traders are expected to close positions in advance or avoid initiating trades until the restriction has passed.

The specific news events that trigger restrictions vary by firm. Some firms maintain their own calendar of high-impact events, such as Non-Farm Payrolls, CPI, FOMC statements, or central bank announcements. Others rely on standard third-party economic calendars. Because each firm defines these differently, traders must check the firm’s official list of restricted events rather than relying solely on general economic calendars.

Variability Across Firms and Accounts

News trading rules are not universally standardized. Some firms prohibit all trading around high-impact news across every account, while others allow it in certain account types or once the trader reaches the funded stage. Within the same firm, the rules may differ based on account size, evaluation plan, or level of experience. In more flexible accounts, traders may be allowed to trade through news events as long as they remain compliant with all other rules.

Because of this variability, it is important to read the firm’s news trading policy carefully for each specific account type. Ignoring the restriction, even unintentionally, can result in disqualification, payout denial, or forfeiture of account status.

Purpose of the Restriction

The main reason firms enforce a news trading rule is to prevent traders from exploiting rapid moves that occur during major economic announcements. News events often lead to sharp spikes in liquidity and volatility that can result in large slippage, unfair fills, or short-term price manipulation. Without a restriction in place, some traders might use oversized positions or gamble through these windows, increasing the firm’s risk exposure. By limiting news trading, firms reduce their platform and funding risk while also encouraging more controlled and strategy-based trading.

When News Trading Is Allowed

Some firms do permit trading during news events, especially in more advanced or unrestricted funded accounts. In these cases, traders are still expected to follow all other account rules, including position size, risk limits, and directional intent. Firms that allow news trading generally ask that traders enter positions with a clear directional bias and not attempt to straddle the market using bracket orders or other order types designed to capture fast moves in either direction.

Summary

The news trading rule limits trading activity around major economic announcements to reduce risk and prevent exploitative behavior. It is most often enforced during funded stages but may also apply during evaluations depending on the firm and account type. Each firm defines which news events are restricted and sets specific time windows where trading is not allowed. Some firms allow news trading with additional conditions, such as directional intent and strict rule compliance. Traders should always check their firm’s news policy and plan accordingly to avoid violations and protect their account standing.