News Trading with Prop Firms: Complete Strategy Guide

News events create the biggest moves in financial markets. For skilled traders, they represent significant profit opportunities. But many prop firms restrict news trading, making it crucial to understand the rules and develop compliant strategies.

What Is News Trading?

News trading involves opening or closing positions around scheduled economic events that create high market volatility. Key events include:

• Non-Farm Payrolls (NFP) — First Friday of every month
• Federal Reserve (FOMC) decisions — 8 times per year
• Consumer Price Index (CPI) — Monthly
• GDP releases — Quarterly
• Central bank rate decisions — Monthly (ECB, BOE, BOJ)
• Employment data — Monthly

News Trading Restrictions by Firm

How News Restrictions Work

The typical restriction works like this:

1. The firm publishes a calendar of restricted news events
2. A window opens before the event (usually 2-5 minutes)
3. During this window, you cannot open new positions
4. The window closes after the event (usually 2-5 minutes)
5. Existing positions are usually allowed to remain open (check your firm's specific policy)

• Events rated "high impact" on sites like ForexFactory, Investing.com, or the firm's own calendar
• Usually limited to USD, EUR, GBP, and JPY events
• Some firms restrict all instruments during news; others only restrict directly affected pairs

Strategy 1: Pre-News Positioning

Works with: Firms that allow holding positions through news

Instead of opening positions during the restricted window, position yourself before the window opens:

1. Analyze the expected outcome using economic forecasts
2. Enter your position 15-30 minutes before the news event
3. Set your stop loss and take profit before the restricted window
4. Let the news event play out while your position is already open

Strategy 2: Post-News Momentum

Works with: All firms (trading after the restricted window)

The initial reaction to news often creates a trend that continues for 30-60 minutes. This strategy trades the follow-through, not the initial spike:

1. Wait for the news event and initial volatility to settle (10-15 minutes)
2. Identify the direction of the move
3. Wait for a pullback or consolidation
4. Enter in the direction of the initial move
5. Target 50-100% of the initial move as your take profit

Strategy 3: Straddle (Where Allowed)

Works with: FundedTradingPlus, Goat Funded Trader, firms that allow news trading

1. Place a buy stop and sell stop on either side of the current price, 20-30 pips away
2. Set tight stop losses on both orders (15-20 pips)
3. When the news hits, one order triggers and the other gets cancelled
4. The triggered order rides the momentum

Strategy 4: News Fade

Works with: All firms (executed 30+ minutes after news)

Sometimes the market overreacts to news, creating a fade opportunity:

1. Wait for the initial news spike (30-45 minutes)
2. If the move seems overdone (based on the actual vs expected data)
3. Enter a counter-trend position
4. Target a return to 50% of the news move

Risk Management for News Trading

News trading is inherently volatile. Adjust your risk accordingly:

• Reduce position size by 50% during news-related trades
• Widen your stop loss to account for increased volatility
• Accept wider spreads — Spreads can expand 5-10x during high-impact events
• Never risk more than 1% on a news trade
• Set a maximum loss for news trading days at 2% of account

Calendar Management

Stay organized with an economic calendar:

1. Mark all high-impact events at the beginning of each week
2. Note which events are restricted by your firm
3. Plan your trading around these events
4. Set alerts 30 minutes before each event

The Best News Events to Trade

Not all news events are equal. Here are the most tradeable:

Tier 1 (Highest Impact)

• US Non-Farm Payrolls
• Federal Reserve rate decisions
• US CPI data
• ECB rate decisions

Tier 2 (High Impact)

• US GDP releases
• Bank of England rate decisions
• US retail sales
• PMI data (manufacturing/services)

Tier 3 (Moderate Impact)

• ADP employment
• Trade balance
• Consumer confidence
• Housing data

Conclusion

News trading with prop firms requires understanding both the market opportunity and the firm's specific restrictions. Whether you trade before, during, or after news events, having a clear strategy and strict risk management is essential.

For maximum flexibility, choose firms like FundedTradingPlus or Goat Funded Trader that have no news restrictions. For firms with restrictions, the post-news momentum strategy is the most reliable approach.

Check our rules comparison page to see exactly which firms allow news trading and what restrictions apply.