News Trading Rule in Prop Firms
Rules for trading during economic news vary between prop firms. Some allow them, others restrict them. Learn what each company applies.
Why Do News Trading Rules Exist?
News trading rules exist to protect prop firms against extreme volatility, slippage, and irregular executions that typically occur during major macro events such as CPI, NFP, or FOMC.
Prop Firm Approaches
In general, prop firms apply three approaches:
- Allow news trading without restrictions
- Allow it with time limitations (blackout windows)
- Prohibit it in certain plans or phases
The restriction may depend on the account type, the contracted plan, or whether the trader is in evaluation or the funded phase.
When limitations exist, the most common requirement is to be flat (no positions or orders) during a time window around the news release. In other cases, trading is allowed, but strategies such as hedging or non-directional structures are prohibited.
What Are TIER 1 News Events?
When a prop firm prohibits or limits trading around TIER 1 news, it almost always refers to the same macroeconomic releases. These are events with extreme volatility, where slippage and irregular executions occur.
Most Common TIER 1 News Events
1. Monetary Policy (the most important)
- FOMC Interest Rate Decision
- FOMC Statement
- FOMC Press Conference
- FOMC Minutes
2. U.S. Employment
- Non-Farm Payrolls (NFP)
- Unemployment Rate
- Average Hourly Earnings
- (Usually considered a single "Employment Report")
3. Inflation
- CPI
- Core CPI
- (Many companies also include: PCE and Core PCE)
4. Energy (only if you trade Crude / Gas)
- Crude Oil Inventories (EIA)
- Natural Gas Storage Report
Key Takeaway
Before trading during news events, review the specific rules for your plan and phase. What is allowed in evaluation may be restricted in the funded account, and vice versa.