If you have been trying to figure out how to pass a prop firm challenge trading news events, you have landed on the right page. News events are some of the most powerful market movers in trading. They create massive price swings in seconds, offer quick profit opportunities, and can just as easily wipe out your account balance if you are not careful.
For prop firm traders, news events come with an extra layer of complexity. Each firm has its own rules around when and how you can trade during major economic releases. Get it wrong, even by a few minutes, and you could lose your entire challenge progress regardless of how well you were performing before that point.
This guide covers everything you need to know about trading news events during a prop firm challenge. From understanding which events matter most, to how different firms handle them, to proven strategies for navigating volatility without breaking the rules, you will find practical, clear guidance here.
What Are High Impact News Events in Trading?
Before diving into prop firm specific rules, it is important to understand which news events actually move markets in a significant way.
High impact news events, often referred to as red folder events on economic calendars, are scheduled economic releases that have historically caused the biggest price movements across currency pairs, indices, and commodities. The most important ones include:
Non-Farm Payrolls (NFP)
Released on the first Friday of every month by the U.S. Bureau of Labor Statistics, NFP measures the number of jobs added or lost in the U.S. economy. It is one of the most closely watched events in forex and is known to cause hundreds of pips of movement within seconds of its release.
Consumer Price Index (CPI)
CPI measures inflation by tracking changes in the price of goods and services. It directly influences expectations around interest rate decisions and causes sharp movements in USD pairs, gold, and major indices.
Federal Open Market Committee (FOMC) Decisions
The FOMC meets several times a year to decide on U.S. interest rates. Announcements and press conferences from the Fed Chair can move markets dramatically, sometimes for hours after the release.
Other Major Events
These include GDP releases, unemployment claims, retail sales data, central bank speeches from the ECB, Bank of England, and other major institutions, as well as geopolitical developments that trigger sudden market reactions.
During NFP or CPI releases, spreads can widen by 10 to 50 times their normal size. This means a stop loss might not trigger at your intended price, causing a larger loss than expected through a process known as slippage. For prop firm traders, this is not just a financial problem. It is a rule violation risk.
Why Prop Firms Have Rules Around News Events
Prop firms restrict news trading to manage risk. During high volatility, liquidity can dry up, causing slippage that might breach drawdown limits instantly. These restrictions also protect the firm’s capital from behavior that relies solely on lucky volatility spikes rather than consistent trading skill.
A growing number of firms now enforce blackout periods around high-impact announcements like Non-Farm Payrolls, CPI, and FOMC decisions. These blackout periods mean you are either not allowed to open new trades, or you must close all existing positions within a set window around the news release time.
Prop firms enforce strict penalties for rule violations during news events, and the consequences can be severe. For instance, ThinkCapital’s policy from May 2025 explicitly states that any trading activity within two minutes before or after a high-impact news event is considered a breach. Similarly, FunderPro’s 2025 guidelines include strict prohibitions against trading during specified news releases, with confirmed violations often leading to account termination.
Understanding these rules is not optional. It is the foundation of passing a prop firm challenge that involves trading around major economic releases.
The Standard News Trading Rule Across Most Prop Firms
Most prop firms use the same rule: no trading two minutes before or two minutes after a scheduled high-impact news release. This four-minute blackout applies to all positions.
Common restrictions include 2 to 5 minute windows before and after announcements where opening or closing trades is prohibited. FTMO enforces 2 minutes, QT Funded has 5 minutes, and MyFundedFX applies 3 minutes with soft breaches that remove profits but preserve accounts.
It is also important to note that some firms allow news trading in evaluation accounts but restrict it in funded accounts. Account-specific rules mean the same firm can have completely different policies depending on whether you are in the challenge phase or the live funded phase.
This distinction matters a lot. Always read the specific rules for the exact account type you are trading, not just the firm’s general policy.
Prop Firms That Allow News Trading
Not all prop firms ban news trading. Eight modern prop firms now allow active trading during high-impact news releases like NFP, CPI, and FOMC announcements. This includes four futures-focused firms such as FundingTicks and Apex Trader Funding, and four forex and CFD-focused firms including FundingPips and E8 Markets.
FundingTicks completely removes news restrictions, and My Funded Futures ensures news traders enjoy the same opportunities as swing traders. Apex Trader Funding offers flexibility, while FundingPips caters to Expert Advisor users who rely on news-based algorithms.
If your strategy depends specifically on trading during news releases, your first step should be choosing a firm whose rules align with that approach. If you trade around news events, verify that the firm allows it and that their execution does not penalize you with excessive slippage during volatile moments.
How to Use an Economic Calendar During Your Challenge
One of the most practical tools for any prop firm trader is an economic calendar. This tool shows you the exact date, time, and expected impact of every major economic release so you can plan your trading sessions accordingly.
Reliable economic calendars include Forex Factory, which is the most popular free option with excellent filtering and customizable impact levels; Investing.com, which has a mobile app with push notifications; TradingView, which integrates the calendar directly within the charting platform; and the CME Group economic calendar, which is futures-focused and emphasizes reports that move derivatives markets.
Here is how to use an economic calendar effectively during your prop firm challenge:
Check it every morning before you start trading. Know exactly which news events are scheduled for that day and what time they are released. If any high-impact events are listed, plan your trading sessions around them.
Set alerts for restricted events. Most calendar tools allow you to set email or mobile push notifications for specific events. Set alerts for NFP, CPI, and FOMC at minimum. This removes the risk of forgetting about a release while you are in an active trade.
Mark blackout windows on your chart. Before the trading session begins, mark the blackout period your firm enforces around each high-impact event. This gives you a visual reminder not to open new trades during that window.
Use color coding by impact level. Most economic calendars use a color or folder system to distinguish between low, medium, and high-impact events. Focus your attention on the red or high-impact events as these are the ones most likely to be restricted by your prop firm.
Strategies for Trading News Events in a Prop Firm Challenge
Strategy 1: Avoid News Events Entirely
The simplest and safest approach is to avoid trading during major news events altogether. This is especially recommended if you are still in the early stages of your challenge and have limited buffer room between your current balance and the maximum drawdown limit.
Avoid trading during major news events unless your strategy is specifically designed to handle that volatility. Spreads widen, slippage increases, and prices can move violently in both directions within seconds. Even if your analysis is correct, execution can go wrong in ways that breach your drawdown limits before you react.
Close any open positions at least five minutes before a scheduled high-impact release, and wait at least five to ten minutes after the release before considering a new entry. This gives the market time to settle from the initial spike and reduces your exposure to unpredictable price behavior.
Strategy 2: Trade the Post-News Continuation
If your firm allows trading after the blackout window ends, one popular approach is to wait for the initial news spike to settle and then trade the continuation of the resulting trend.
Here is how this works in practice:
A strong NFP report is released at 8:30 AM EST. The dollar surges sharply against major pairs. After the initial chaotic spike, the market begins to settle and a clear directional trend emerges. Once your firm’s blackout window has passed, you can look for a clean entry in the direction of that trend using standard technical analysis tools such as support and resistance levels, moving averages, or candlestick patterns.
This approach combines the momentum generated by the news event with a disciplined, rule-compliant entry. It avoids the highest-risk period of the release itself while still allowing you to benefit from the volatility it creates.
Strategy 3: Reduce Position Size Around News Events
If you are in an active trade when a news event approaches and you are unable or unwilling to close it, reducing your position size before the release is a useful risk management tool.
Sizing down on high-volatility events like FOMC, NFP, and CPI reduces the top end of your daily profit and loss range. Smaller peaks keep your consistency ratio manageable and protect your account from an unexpected spike that triggers the drawdown limit.
As a general rule, consider reducing your position size to 50% of your normal trade size on days when major news events are scheduled. This gives you more room to absorb unexpected volatility without breaching your challenge rules.
Strategy 4: Use a Straddle Approach (Only on News-Friendly Firms)
On firms that explicitly allow news trading, some experienced traders use a straddle approach. This involves placing both a buy stop and a sell stop order just above and below the current price before the news release. When the price spikes in either direction, one of the orders is triggered.
The execution for this approach involves placing buy stop orders 10 pips above the current price and sell stop orders 10 pips below it, then canceling any unfilled order immediately after the news release, and closing the position within 15 minutes as momentum fades.
However, this strategy comes with serious risks. Placing buy and sell stops above and below price before news is often banned by many firms and is seen as gambling-like behavior that can lead to account termination. Only use this approach if you have confirmed in writing that your firm allows it. Never assume.
Strategy 5: Plan Your Trading Days Around the Economic Calendar
Rather than reacting to news events as they happen, build your weekly trading plan around them from the start. Review the economic calendar at the beginning of each week and identify which days have major news releases.
On heavy news days, plan to trade smaller size or sit out entirely. On quieter days with no major releases scheduled, focus on executing your highest-quality setups. This approach protects your drawdown during volatile periods and puts your best trading forward when conditions are most predictable.
Common Mistakes Traders Make With News Events During Challenges
Holding Positions Through a Blackout Window
This is one of the most common reasons traders get disqualified during prop firm challenges. Some prop firms restrict trading during major economic news releases, and being unaware of these rules can result in disqualification even if your trades are profitable. Holding a position through a blackout window, even if that position is profitable, is still a rule violation at most firms.
Assuming the Same Rules Apply Across All Accounts
Some firms allow news trading in evaluation accounts but restrict it in funded accounts. Many traders pass their challenge without incident and then get their funded account terminated because they did not realize the rules had changed. Always reread the rules specific to your account type before you start trading any new phase of the evaluation.
Relying on Memory Instead of a Calendar
Markets move fast. It is easy to forget that a CPI release is scheduled for 8:30 AM when you are focused on a trade setup. Relying on memory or informal reminders is insufficient given the consequences of violations on funded accounts. Set up email or mobile alerts for the three core restricted events, which are FOMC, NFP, and CPI, and any instrument-specific events relevant to your trading pairs.
Trading the Spike Without a Tested Strategy
Many traders see the huge candle that prints during a news release and feel the urge to jump in. This impulse-based approach almost always leads to poor entries, blown stops, and unnecessary drawdown. Many firms have rules restricting trading around major news events like Non-Farm Payrolls or CPI releases. Even if they do not, trading news without a specific, tested strategy is incredibly risky.
Overconcentrating Profits on News Days
FOMC, NFP, CPI, and ECB rate decisions are volatility days that produce unusually large single-day wins. A single high-profit day on an otherwise moderate daily performance pattern can violate the consistency rule that many prop firms enforce. Even if you make money on a news day, a disproportionately large profit from a single session can delay or prevent your payout.
How Different Types of Traders Should Handle News Events
Day Traders
Day traders who close all positions by end of session are generally less exposed to overnight news risk. However, intraday news events still pose a challenge. Day trading involves opening and closing positions within a single trading session so no position is held overnight. The defining feature centers on avoiding exposure to events that occur when markets are closed. For day traders, the key is knowing the intraday news schedule and planning entries and exits accordingly.
Scalpers
Scalpers take many small, fast trades throughout the day. News events are particularly dangerous for scalpers because the spike in spreads during a release can immediately turn a winning trade into a loser. If you scalp, avoid trading in the 10 to 15 minutes surrounding any major release, even if your firm does not explicitly restrict it.
Swing Traders
Swing traders hold positions for multiple days and are naturally exposed to news events that occur while a trade is open. If you are a swing trader who holds trades for 2 to 5 days, you will want a challenge that allows overnight holds, minimal restrictions on news trading, and a longer evaluation period, maybe 30 to 60 days. Look for firms that offer a swing add-on or relaxed rules for longer-duration trades.
Risk Management Rules to Follow on News Days
Regardless of your trading style or the firm you are with, these risk management principles apply on every news day:
Never risk more than 1% to 2% of your account on any single trade during a news session. Risk only 0.5% to 1% per trade during prop firm challenges. This conservative approach creates sufficient buffer for multiple consecutive losses without triggering drawdown limits.
Set a personal daily loss limit that is stricter than the firm’s official limit. If the firm allows a 5% daily drawdown, set your own personal limit at 2% to 3%. This gives you a buffer between your stop point and the firm’s limit, reducing the chance of an accidental violation during volatile conditions.
Do not add to losing positions during news events. Prices can move hundreds of pips in seconds during a major release. Adding to a losing trade in that environment dramatically increases your risk of a large, fast loss that breaches your drawdown limit.
Close out or reduce positions before scheduled blackout windows. Do not wait until the last minute. Set a reminder 10 minutes before each restricted event so you have time to manage your open trades without rushing.
How to Choose the Right Prop Firm if You Want to Trade News Events
If news trading is central to your strategy, choosing the right firm is the most important decision you will make before starting a challenge. Here is what to look for:
- Check the news trading policy for both challenge and funded accounts. As established, these can be different. Some firms are more lenient during the evaluation but enforce strict blackout periods once you are funded.
- Look for firms with shorter or no blackout windows. A two-minute blackout is significantly easier to work around than a five-minute one. Some firms like Apex Trader Funding have minimal or no restrictions at all.
- Consider futures-focused firms if you are a news trader. Futures markets operate on centralized exchanges with set trading hours, which means they tend to react quickly and sharply to major news releases.
- Read the terms and conditions carefully. A 2023 study of 3,000 prop traders found that 27% of challenge failures were due to violations of risk management protocols or misunderstandings of the terms. News-related violations are a significant contributor to this number.
Final Thoughts
Understanding how to pass a prop firm challenge trading news events comes down to three things: knowing your firm’s rules in detail, using an economic calendar every single day, and having a disciplined strategy that accounts for volatility before it happens.
News events are not your enemy as a prop trader. In the right hands, with the right firm, they can actually accelerate your path to hitting profit targets. But without preparation and rule awareness, they are the single fastest way to lose all your challenge progress in a matter of seconds.
Plan ahead, protect your drawdown, and treat every high-impact release on the economic calendar as an event that deserves your full attention.
Looking for an edge in your prop firm challenge? Check out our professional prop firm challenge pass service today. Our experienced team uses proven, rules-compliant strategies to navigate even the most volatile market conditions, including major news events, and get you funded faster. Visit our website now and take the first step toward a funded trading account.
Frequently Asked Questions
Can I trade during news events on a prop firm challenge?
It depends entirely on the firm. Some firms allow it with no restrictions, while others enforce blackout windows of 2 to 5 minutes around high-impact releases. Always check your specific firm’s rules before placing any trades near a scheduled news event.
What happens if I accidentally trade during a blackout window?
In most cases, your account will be breached and your challenge will be failed immediately. Some firms may issue a warning for a first offence, but this is not standard practice. Treat blackout windows as hard rules with zero tolerance.
Which news events are most likely to be restricted by prop firms?
The three most commonly restricted events are NFP, CPI, and FOMC decisions. These are the releases that create the most volatility and are considered the highest risk for drawdown violations.
Is news trading a good strategy for passing a prop firm challenge?
It can be, but only if you are trading on a firm that allows it and you have a tested, rules-based strategy for handling volatility. Attempting to trade news impulsively without a clear plan is one of the fastest ways to blow through your drawdown limit and fail the challenge.
How do I avoid accidentally violating news trading rules?
Use a reliable economic calendar, set alerts for every major news release, mark blackout windows on your charts before each session, and create a habit of closing or reducing positions well before restricted events. Never rely on memory alone to track news schedules.
