Most prop firms prohibit holding positions within a 2-minute window before and after major economic releases (NFP, FOMC, CPI) to prevent losses driven by extreme slippage. This rule is not trivial: violating a prop firm's news trading policy can result in immediate challenge disqualification or funded account termination, even when overall performance is positive. Understanding exactly which restrictions apply, at which firms, and how to adapt your trading strategy is a mandatory step before starting any prop firm evaluation.
Why do prop firms restrict news trading?
News trading restrictions exist for a precise economic reason: prop firms finance traders using their own capital and absorb losses that exceed the contractual drawdown limits.
Extreme slippage risk during NFP and FOMC
During major economic releases, markets react within seconds with violent price displacements. On EUR/USD, a Non-Farm Payrolls report (published on the first Friday of each month) can trigger moves of 30 to 80 pips in under 60 seconds, according to data published by leading forex brokers and economic calendar platforms like Forex Factory.
The problem for leveraged traders: a stop loss placed 20 pips away can be executed at 40 or 60 pips during extreme volatility. This slippage makes risk management unpredictable. A position sized for 1% account risk can actually lose 3 to 5% if the spread widens drastically and the stop loss fills at a price well beyond the calculated threshold.
Stop losses are not guaranteed prices
During NFP or FOMC releases, market makers widen spreads and may suspend immediate order execution. Your stop loss is a market instruction, not a guaranteed price: it will execute at the first available price after the volatility spike, often far beyond your calculated risk level.
Prop firm liability for uncontrolled losses
A prop firm financing a trader at $100,000 that allows news trading absorbs the risk of a single economic release generating a loss exceeding the allowed drawdown (typically 5 to 10%). If a trader loses 12% on an NFP due to slippage when the limit is 10%, the prop firm absorbs the excess loss.
To limit their exposure, prop firms impose prohibition windows around high-impact events. This is an institutional risk management decision, not an arbitrary restriction on traders.
Different levels of restriction
News trading policies vary significantly across prop firms:
| Restriction Level | Description | Example |
|---|---|---|
| Total ban | No positions may be opened or held during news windows | Certain futures-specialized prop firms |
| Time window | Ban on holding positions X minutes before and Y minutes after publication | FTMO: 2 minutes before and 2 minutes after |
| Leverage reduction | Available leverage is reduced around major announcements | Certain European CFD prop firms |
| Permitted with condition | News trading allowed but news-related losses are not covered | Certain scalping prop firms |
Which prop firms restrict news trading?
News trading policies differ at each prop firm. Here are the rules for the main platforms in 2026.
FTMO: 2-minute restriction window
FTMO applies a clear news trading rule: no positions may be opened or held within the 2 minutes preceding or following a high-impact or very high-impact economic publication. This rule applies to both phases of the FTMO challenge and to the funded account.
Events triggering this restriction include:
- NFP (US Non-Farm Payrolls)
- FOMC rate decisions and Federal Reserve press conferences
- US CPI and PPI releases
- ECB rate decisions and press conferences
- GDP reports from major economies (US, Eurozone, UK)
Violating this rule results in automatic challenge disqualification, regardless of overall performance. FTMO monitors order execution timestamps and can retroactively cancel trades executed during the restriction window.
Topstep: daily loss limit as the primary control
Topstep, specializing in CME futures trading, takes a different approach. Futures contracts (E-mini S&P 500, NQ, EUR/USD CME) benefit from deeper liquidity than CFDs, which mechanically reduces extreme slippage risk.
Topstep does not formally ban news trading but enforces strict daily maximum loss rules. Exceeding this limit for any reason, including slippage from an NFP release, triggers automatic account closure and disqualification. Traders must therefore size positions so that an extreme slippage scenario cannot breach the daily loss threshold.
FundedNext and others: variable policies
FundedNext takes an intermediary approach that varies by account type. On Stellar accounts, news trading is permitted but positions held during high-impact announcements are treated as an aggravating factor in consistency evaluations. On Express accounts, restrictions are stricter.
The large majority of mid-sized prop firms apply policies similar to FTMO, with restriction windows ranging from 1 to 5 minutes. Before any challenge, reviewing each prop firm's specific trading rules on economic announcements is a non-negotiable step.
Always verify rules before starting a challenge
News trading policies evolve regularly. Before starting a challenge, read the prop firm's trading rules page carefully and verify the last update date. The rules in effect when you sign up are the ones that apply to your evaluation period.
How to identify high-risk news before trading
Trading in a prop firm without consulting an economic calendar is a mistake that can cost you your challenge. Here is how to identify high-risk events with precision.
Economic calendar: NFP, FOMC, CPI, ECB
Forex Factory provides the most widely used economic calendar among prop firm traders. It displays all global economic publications with their exact time, estimated impact, and consensus forecasts.
Key publications to monitor for forex and equity index traders:
- First Friday of every month: US NFP (typically 8:30 AM EST)
- 8 times per year: FOMC rate decisions (2:00 PM EST) and Fed press conferences
- Every 6 weeks: ECB rate decisions (8:15 AM EST)
- Monthly: US CPI (8:30 AM EST), US PPI, and GDP reports
3-star vs 2-star vs 1-star impact: what to watch
Forex Factory classifies economic events by their potential market impact in three tiers:
| Impact | Forex Factory Color | Description | Recommended Action |
|---|---|---|---|
| 3 stars | Red | Major publications: NFP, FOMC, ECB, CPI | Close all positions at least 5 minutes before |
| 2 stars | Orange | Significant but moderately volatile publications | Reduce exposure and monitor closely |
| 1 star | Yellow | Minor publications, low expected impact | No restriction required |
The practical rule for prop firm traders: treat all 3-star (red) events as trading-prohibited zones, regardless of your specific prop firm's exact rules. This is the most conservative approach to avoid any news-related disqualification.
Monitoring tools: Forex Factory and Investing.com
Two essential resources for tracking the economic calendar:
Forex Factory (free): filterable by currency, impact, and time. Supports email or browser notification alerts. The reference tool for the prop firm community for planning sessions while avoiding high-risk windows.
Investing.com Economic Calendar (free): a popular alternative with additional data on historical forecasts and past results per event. Useful for understanding the typical volatility of a specific release.
Plan your week around the economic calendar
Every Monday morning, review the week's economic calendar on Forex Factory. Identify all red (3-star) events and plan your trading sessions around these windows. This simple discipline nearly eliminates the risk of news-related disqualification at any prop firm.
Compliant strategies for prop firm news trading rules
It is entirely possible to trade effectively while respecting news trading restrictions. Compliant strategies simply adapt session planning around high-risk time windows.
Closing positions before major announcements
The simplest and safest strategy: systematically close all open positions 5 to 10 minutes before each 3-star publication. This approach offers several concrete advantages:
- Zero risk of news trading rule violation, regardless of the prop firm
- No exposure to extreme slippage during releases
- Freedom to resume trading immediately after the restriction window closes
This strategy requires disciplined calendar monitoring. An alert configured 15 minutes before each major announcement, combined with a 5-minute reminder, is sufficient to never be caught holding a position during a news event.
Trading after the release: post-news setups
A productive alternative: exploiting post-news movements as trading opportunities once the restriction window has closed. Major economic releases frequently create clear directional trends in the 15 to 60 minutes following the publication.
Compliant post-news setups:
Wait for the restriction window to close
Identify the dominant direction
Look for a pullback to a clear level
Size using your standard risk parameters
This approach lets you benefit from the directionality created by releases without exposure to the first-second slippage.
Backtesting your strategies around news events
Before any challenge, backtesting your strategies over periods that include major economic releases lets you evaluate their real behavior during high-volatility contexts. A backtest that ignores news periods gives an incomplete picture of actual performance.
With Backtrex, you can simulate the impact of systematically excluding news windows on your performance metrics: profit factor, maximum drawdown, win rate, and expectancy. This analysis lets you verify that your strategy remains profitable while respecting your prop firm's restrictions.
Understanding the impact of news on your backtest is a prerequisite for passing a prop firm challenge: a strategy that performs exclusively around economic announcements is incompatible with the rules at major prop firms.
For further reading, see our guide on backtesting with prop firm rules and our article on trailing drawdown, another critical rule to simulate before any challenge. You can also review our complete FTMO challenge strategy guide for the full 2026 updated rules.
Important Risk Warning
Conclusion
News trading in prop firms requires precision and discipline. The fundamental rule is simple: verify your prop firm's news trading policy before any challenge, set up systematic economic calendar alerts, and never hold positions within defined restriction windows. Compliant post-news trading strategies allow you to continue exploiting the volatility created by releases without disqualification risk. Rigorous backtesting upfront is the best way to validate that your approach remains consistent and profitable even when systematically excluding high-risk news windows.
No, rules vary considerably by prop firm. FTMO prohibits holding positions within 2 minutes before and after major news events. Topstep permits news trading on CME futures but enforces strict daily loss limits. FundedNext takes an intermediate approach depending on account type. Before any challenge, carefully read your prop firm's trading rules page.
Automatic challenge disqualification or funded account closure without profit payment. Some prop firms retroactively cancel trades executed during restriction windows. Financial risks also include losses from extreme slippage, which can exceed allowed drawdown limits in seconds even with a stop loss in place.
Yes, and it is strongly recommended. A backtest that includes news periods lets you measure how your strategy performs during high-volatility contexts. With a tool like Backtrex, you can simulate the impact of excluding news windows on your metrics (profit factor, drawdown, win rate) and verify that your approach remains profitable under prop firm restrictions.
Each prop firm publishes a list of events that trigger its restriction policy, generally defined by the 3-star (red) impact rating on Forex Factory. The safest approach: treat all red events on Forex Factory as trading-prohibited zones, regardless of what your specific prop firm's rules say exactly.
This depends on your prop firm's rules. FTMO prohibits positions for 2 minutes after publication. Once the window closes, post-news trading is permitted. These setups (entering on a pullback after the initial volatility spike) can be attractive because they offer clear directionality while avoiding first-second slippage.
Yes, restrictions generally apply to all instruments in your account, not just forex. Equity indices (S&P 500, NASDAQ) are particularly sensitive to FOMC decisions and CPI releases. If your prop firm permits cryptocurrencies, economic news restrictions may apply depending on the firm's specific rules.
The best protection: configure calendar alerts 15 and 5 minutes before each 3-star event on Forex Factory, and systematically close all open positions at the 5-minute alert. This daily routine nearly eliminates the risk of accidental news trading rule violations at any prop firm.