A rule that prohibits or limits trading during major economic news events such as FOM Cannouncements, Non Farm Payrolls, C PI releases, and other high-impact economic data releases. Restrictions typically apply for a window of time before and after the event. Most firms allow news trading during the evaluation phase but restrict it during the funded stage.
Why It Matters
- 1Many prop firms restrict trading during major news events because these releases can cause extreme volatility, rapid price spikes, and unpredictable market gaps.
- 2In futures and similar markets, a single news-driven move can quickly exceed drawdown limits, while slippage during these moments can make normal risk management ineffective.
- 3Different firms apply news trading rules in different ways: ● Some restrict all trading 1 to 10 minutes before and after major news releases. ● Some only restrict opening new positions 1 to 10 minutes before and after major news releases but allow traders to close existing ones. ● Others require traders to close all open positions before the news release.
- 4Violating these rules usually results in profits made during the restricted news window being removed from the account, while any losses from those trades are typically not refunded.
Example
Examples of News Trading Restrictions 1.No trading during the firm’s restricted news window Each firm defines its own restricted timeframe around major news events. For example, a firm may require traders not to trade 5 minutes before and 5 minutes after a major release like Non-Farm Payrolls at 08:30. In this case, you should not open or close trades from 08:25 to 08:35. If you open a trade at 08:27 and make $1,500 from the news spike, the firm may remove that profit because the trade was placed during the restricted period. 2. Opening new positions is restricted, but closing is allowed A firm may allow traders to close existing trades during the news window but not open new ones. For example, you opened a buy trade at 08:10 before the news release. At 08:30, when the news comes out, you close the trade for a $900 profit. This is allowed. However, if you open a new trade at 08:30 to catch the volatility, that would violate the rule. 3. All positions must be closed before the news Some firms require traders to close all open trades before the news release. For example, if a major news event is scheduled for 08:30, you must close any open trades before the restricted window begins. If you keep a trade open through the news and it makes a $1,200 profit, the firm may remove that profit because the position was held during the restricted period.
Common Mistakes
- ✖Not checking the economic calendar and accidentally placing or holding trades during restricted news events.
- ✖Assuming the restriction only applies to the exact moment of the release — most firms have buffer windows
- ✖Thinking you can outsmart the restriction by placing orders just before the window starts