Prop firms that allow news trading generally permit it during the evaluation phase (Challenge) but impose time-based restrictions of 2 minutes around major macroeconomic events (NFP, CPI, FOMC) on funded accounts. This distinction is critical: a trader who passes their evaluation using news strategies may find themselves blocked on their funded account if the firm restricts this practice after the Challenge. Understanding these rules before paying evaluation fees can save you hundreds of dollars.
Why do prop firms restrict news trading?
Prop firms manage real capital. Unlike a traditional broker that earns on the spread regardless of outcome, a prop firm loses directly when its funded traders lose money. This asymmetry explains why news trading policies vary so significantly across firms.
Liquidity risk and market impact
During a major release like the NFP (Non-Farm Payrolls) or an FOMC decision, market liquidity drops sharply in the seconds before the announcement, then explodes. Spreads widen unusually, executions can be delayed, and price movements become unpredictable. These conditions create a risk of fast, uncontrollable drawdown on funded accounts.
The U.S. Bureau of Labor Statistics publishes NFP data once per month, on the first Friday of each month. Each release can move major pairs by several dozen pips within seconds, with spreads sometimes widening to 20 to 30 times their normal level. For a prop firm account with a daily drawdown limit of 5%, a single poorly managed news trade can be enough to trigger a violation.
Spreads explode around major news events
During the 30 seconds surrounding an NFP release or FOMC decision, spreads on EUR/USD can reach 10 to 50 pips depending on the broker and market conditions. On a standard lot, this represents an additional 100 to 500 USD in entry and exit costs. Prop firms that accept these conditions expose themselves to rapid losses on their funded accounts.
The prop firm risk model
Prop firms set maximum daily drawdown rules (typically 5% of capital) and global drawdown limits (typically 10%). A news trade that goes wrong can consume a significant portion of this drawdown in seconds. To protect their capital, many firms prefer to ban or strictly limit this practice on funded accounts while tolerating it during the evaluation phase where the trader's own money (the Challenge fees) is at risk.
According to mandatory disclosures required by ESMA under MiFID II regulations, more than 70% of retail investors lose money when trading CFDs. This statistical reality confirms why prop firms filter high-risk strategies through their evaluation rules and news trading restrictions.
Top prop firms allowing news trading in 2026
FTMO: restrictions on funded accounts only
FTMO is the most well-known prop firm in the world, with thousands of funded traders globally. Its news trading policy is nuanced: trading around economic releases is allowed during the Challenge (phase 1) and Verification (phase 2), but banned within a 2-minute window before and after major events (NFP, CPI, FOMC, central bank decisions) on standard funded accounts.
In practice, you can develop and validate your news trading strategy during the evaluation, but you will need to adapt it once funded. FTMO also offers a Swing account that allows news trading without restrictions, including holding positions over the weekend. For the full rules, see the official FTMO trading objectives page.
Learn more about FTMO's complete rule set in our guide on FTMO challenge rules, profit target and drawdown.
The Funded Trader
The Funded Trader (TFT) applies a generally more permissive policy. News trading is typically allowed across all phases, including on funded accounts, with no strict restriction window. TFT offers multiple account types (Standard, Rapid, Knight) with different drawdown rules. A backtest calibrated to the exact rules of each account type remains essential before attempting the evaluation with a news strategy.
E8 Markets
E8 Markets is one of the most open firms regarding news trading. Scalping and news trading are both allowed during the evaluation phase. The rules for funded accounts are less restrictive than FTMO, making it a strong option for traders whose edge relies on economic releases.
E8 Markets uses trailing drawdown (High Water Mark), which changes how drawdown is calculated. Backtesting your strategy against this type of drawdown rule is crucial before attempting the evaluation. See our article on prop firm evaluation backtesting strategy for more details on trailing vs fixed drawdown.
FundedNext: news trading policy
FundedNext has grown rapidly thanks to its attractive profit-sharing model. Their policy on news trading is generally permissive during the Challenge phase. As with all firms, verify the current conditions on their official website before committing, as rules can change without notice.
Always check the current rules
Prop firm news trading policies change regularly, sometimes without notice. Before paying any evaluation fee, verify the rules currently in force directly on the firm's official website. Trading forums and other traders' reviews can also alert you to recent changes.
Tuning your news trading strategy for prop firms
Managing drawdown around news events
Drawdown management is the main challenge of news trading in prop firms. On major pairs (EUR/USD, GBP/USD, USD/JPY), economic releases can generate violent moves in both directions before finding a direction. This volatility can quickly consume a large portion of the daily drawdown allowance.
Reduce position size before the event
Avoid pending orders in the pre-news window
Set a maximum stop-loss per news trade
Close open positions before the event if your strategy does not include it
Backtesting your news trading strategy before the evaluation
The key to passing a prop firm evaluation with a news trading strategy is backtesting it on historical data that includes economic release periods, simulating the exact drawdown rules of the target firm.
Backtrex allows you to faithfully reproduce the rules of any prop firm in your backtest: fixed or trailing daily drawdown, maximum position size, profit target. You can validate that your news trading strategy respects the firm's constraints over several years of historical data before risking evaluation fees.
According to data on prop firm challenge success rates, approximately 10% of traders pass their evaluation. One of the main causes of failure is a drawdown exceeded during a major macroeconomic event. Backtesting your strategy over news periods lets you identify and fix these weaknesses before risking your evaluation fees.
The backtest advantage for news periods
By simulating your strategy over 10 years of data including every NFP, CPI, and FOMC decision, you can precisely measure the maximum drawdown generated by your approach during these events. This information is impossible to obtain any other way before risking real capital.
Comparison of news trading policies by prop firm
| Prop firm | Challenge phase | Funded account | Restriction window | Flexibility level |
|---|---|---|---|---|
| FTMO Standard | Allowed | Banned | 2 min before and after | Low on funded |
| FTMO Swing | Allowed | Allowed | None | High |
| E8 Markets | Allowed | Permissive | Varies by instrument | High |
| The Funded Trader | Allowed | Permissive | Varies by account type | High |
| FundedNext | Allowed | Permissive | Varies | High |
| TradeDay | Restricted | Restricted | 2 min before and after | Low |
| Ment Funding | Allowed | Allowed with restriction | 3 min before and after | Moderate |
| FTUK | Allowed | Allowed | None | Very high |
This comparison is based on publicly available information as of November 2026. Policies change regularly: always verify the current rules on the official websites of the firms before committing. For a broader overview, see our article on the best prop firms for beginners.
Important Risk Warning
Conclusion
News trading is a viable strategy to pass a prop firm evaluation, provided you choose the right firm and strictly follow the rules in force. Most prop firms tolerate news trading during the Challenge phase, but restrictions on funded accounts vary considerably. FTMO Standard restricts news trading on funded accounts, while FTUK and E8 Markets allow it freely.
The most important step before paying any evaluation fee: backtest your strategy against the exact rules of the target firm. Simulating NFP, CPI, and FOMC events over 5 to 10 years of data with real drawdown constraints will give you an honest picture of your strategy's chances of success. See our guide on how to pass a prop firm challenge to prepare your next evaluation.
Test your news trading strategy with Backtrex: free account and guided tour, then a lifetime Pro or Max license paid once. If you buy from the EU, EEA or UK, 14 days to change your mind.
FAQ: news trading and prop firms
The most permissive prop firms on news trading in 2026 are E8 Markets, FTUK, The Funded Trader and FundedNext. FTMO allows news trading during the Challenge and Verification phases, but bans it within 2 minutes before and after major events (NFP, CPI, FOMC) on standard funded accounts. FTMO Swing is an unrestricted alternative. TradeDay applies the strictest rules, with a 2-minute ban before and after any high-impact release.
Yes, with most prop firms that allow news trading during the Challenge phase. However, it is essential to backtest your strategy against the exact drawdown rules of the target firm before risking evaluation fees. A strategy that works on a standard account can easily exceed the allowed daily drawdown during an event like NFP if it is not properly calibrated to the prop firm's constraints.
Use a tool like Backtrex to simulate your strategy on historical data that includes news periods (NFP, CPI, FOMC). Configure the exact rules of the prop firm in the backtest: daily drawdown, global drawdown (trailing or fixed), maximum position size, profit target. Analyze results over at least 2 to 3 years of data for a statistically meaningful sample.
FTMO allows news trading during the Challenge and Verification phases. On standard funded accounts, trading is banned within a 2-minute window before and after major macroeconomic events (NFP, CPI, FOMC decisions). FTMO Swing is an option with no news trading restrictions, also allowing positions to be held over the weekend.
FTUK and E8 Markets are generally considered the most permissive prop firms for news trading in 2026. FTUK imposes no restrictions on trading around news events. E8 Markets allows scalping and news trading during all evaluation phases. FTMO Swing also offers complete freedom on news trading, including on the funded account.
News trading is inherently riskier than trading in normal market conditions, because volatility and spreads increase significantly around major economic releases. For a prop firm account with strict drawdown rules, this risk is amplified. Backtesting your approach on historical data that includes news periods is essential to calibrate your position sizes and avoid triggering drawdown limits during unexpected events.
News trading rules are published in the terms and conditions and FAQ of each prop firm. For FTMO, check the trading objectives page. For other firms, search for "news trading policy" or "trading restrictions" in their official documentation. Rules change frequently, so verify them before each evaluation attempt.