Want to jump straight to the answer?
Here we made a selection of the Top Prop Firms that we chose based on allowance to trade on News, the availability of a comprehensive News section, and also reputation and trustworthiness to keep your investments safe
Best Prop Firms Allowing News Trading
- FunderPro - Exclusive Discount Code (SBOCOUPON)
- FTMO - FTMO charges a one-time fee only
- Topstep -
it takes a low percentage cut on your profits
- Toptier Trader - Over 2k Trustpilot reviews with an excellent rating
- the5ers - Let you trade with leverage of up to 1:30
Can I trade News on any Prop Firm Trading Account?
Have you ever wondered if you can trade news events on a prop firm trading account? Well, the good news is that with most prop firms, you are generally allowed to do so during the evaluation phases. However, it's important to be aware of the risks involved, especially when it comes to slippage.
In this guide, we will explain what trade the news means and why trading the news can be beneficial and finally, we will look into the rules surrounding news trading in prop firms and the responsibility that falls on the trader in case of violations. While prop firms cannot guarantee profits or protect you from losses during high-risk news events, understanding the ins and outs of this practice will help you make informed decisions.
What is trading the news?
Trading the news refers to a strategy in which traders use news releases and events to make decisions about buying or selling financial instruments, particularly in the forex market. The goal is to take advantage of market movements that occur as a result of these news events.
For instance, let's consider a scenario where there is a rumor of a central bank planning to increase interest rates. A news trader might decide to buy a specific currency based on this rumor. Later, when the central bank officially announces the interest rate hike, the value of the currency tends to rise. At this point, the news trader would sell the position, capitalizing on the currency's increased value.
Political events, such as the Brexit process, can have a significant impact on how traders approach trading pairs like GBP/USD. The outcome of political decisions and developments can cause fluctuations in currency values, presenting opportunities for news traders to make profitable trades.
Why trade the news?
Trading the news can be beneficial for several reasons. Firstly, economic and political news provides valuable insights into market trends and conditions. By staying informed about news events, traders can gain a better understanding of the factors influencing the financial markets. This knowledge enables them to make more informed decisions when buying or selling financial instruments.
Secondly, preparing for news events allows traders to react promptly and avoid wasting time trying to understand the event as it unfolds. The forex market, for example, may take several hours or even days to fully absorb the impact of an economic release. By being prepared and having a plan in place, traders can seize opportunities right from the beginning, maximizing their chances of success.
By trading the news, traders can take advantage of the initial market reactions that occur as a result of news events. These reactions can lead to significant price movements, presenting opportunities for traders to capitalize on these fluctuations and potentially make profitable trades.
In summary, trading the news offers the advantage of being well-informed, proactive, and able to capitalize on market movements at the earliest stages, allowing traders to potentially enhance their trading performance and profitability.
How can I Stay updated on important financial news and events?
To stay updated on financial news, traders have various options available. They can follow specialized news apps or platforms and subscribe to daily or weekly newsletters offered by news providers. These platforms provide access to a variety of news sources, allowing traders to stay informed and make informed trading decisions based on the latest market developments.
Additionally, many Forex brokers offer market news and updates directly on their trading platforms or through third-party solutions. By conducting news analysis before entering a trade, traders can gain valuable insights into the factors shaping the Forex markets and adjust their trading strategies accordingly.
Some notable platforms include Bloomberg, Financemagnates, Fxstreet, Forexfactory, Forexpeacearmy, Tradingview, and Forexcrunch.
Ways to trade the news
When it comes to trading the news, there are different approaches depending on whether the news event is scheduled or unscheduled.
Scheduled News Events
Scheduled news events are events that occur at specific times and dates, such as economic data releases, company earnings reports, and general elections. Here are some ways to trade scheduled news
- Economic Calendar: Use an economic calendar to keep track of upcoming news releases and their expected impact on the markets. This helps traders plan their trades and positions accordingly.
- News Feeds: Follow news feeds from reputable sources that provide real-time updates on scheduled news events. This allows traders to stay informed about any developments that may impact their trading decisions.
- Technical Analysis: Combine technical analysis with scheduled news events. Analyze price charts and indicators to identify key levels of support and resistance, as well as potential entry and exit points for trades.
Unscheduled or Sporadic News Events
Unscheduled news events are unexpected events that can have a significant impact on the markets, such as global financial crises or unexpected geopolitical events. Here are some considerations for trading unscheduled news
- Risk Management: Due to the unpredictable nature of unscheduled news events, it is crucial to have proper risk management in place. This includes setting stop-loss orders and limiting position sizes to protect against potential volatility and market fluctuations.
- Stay Informed: Stay updated with current events and news sources to be aware of any unexpected developments that could impact the markets. This allows for quicker reactions and adjustments to trading strategies.
- Caution and Patience: Exercise caution and patience when trading during unscheduled news events. Market volatility can be high, and it is essential to wait for more stable market conditions before making trading decisions.
How News Affects the Market Duration?
A study conducted by Martin D. D. Evans and Richard K. Lyons, published in the Journal of International Money and Finance (2004), suggests that the market can continue to react to news releases for hours or even days after the information becomes available.
The study discovered that the impact on returns, or changes in prices, tends to happen mostly on the first or second day after the news is released. However, the effects can still be felt until the fourth day. This means that the market may experience ongoing movements as a response to the news.
Furthermore, the study revealed that the influence on the flow of buy and sell orders remains significant on the third day and can still be observed on the fourth day. This indicates that the market activity related to the news can persist for a few days. This suggests that traders should remain attentive to market movements and consider the effects of news over an extended period when making trading decisions.
Pros and Cons of Trading the News
Trading the news offers certain advantages, but it also comes with its share of risks. Let's examine the pros and cons of this approach
Advantages of Trading the News
- Clear Entry and Exit Points: News events provide specific timing for potential trading opportunities, allowing traders to identify clear entry and exit points based on market reactions to the news. This enables traders to plan their trades with more confidence and precision.
- Profitable Opportunities: The economic calendar is filled with various news events and economic releases that can present profitable trading opportunities. By staying informed and strategically planning for these events, traders can capitalize on market movements triggered by the news.
- Efficient Planning: The existence of an economic calendar simplifies the process of planning news events. Traders can easily coordinate their trading activities and strategies around scheduled news releases, enhancing their preparedness and reducing the chances of missing out on potential opportunities.
Disadvantages of Trading the News
- Overnight Risk: Holding positions open overnight can expose traders to overnight risk. Significant news events can occur when trading has ceased, making it difficult to react quickly and manage positions effectively. This can result in unexpected market volatility and potentially unfavorable outcomes.
- Experience and Skills Required: Trading the news effectively requires experience and skills. It is not a technique suitable for new or inexperienced traders. A thorough understanding of how specific announcements impact positions and the broader forex market reaction is essential. Inexperienced traders may struggle to grasp the market perspective and make informed trading decisions.
- Subjectivity and Interpretation: Trading the news goes beyond subjective analysis. It requires a comprehensive understanding of the market dynamics and how various news events can influence price movements. Failing to grasp the broader market perspective may lead to incorrect interpretations and ineffective trading strategies.
Trading the news can offer clear entry and exit points, provide profitable opportunities, and be efficiently planned through the economic calendar. However, it also involves risks such as overnight risk, the need for experience and skills, and the potential for subjective interpretation. Traders should carefully consider these pros and cons before implementing a news trading strategy.
How to choose a Prop firm for news trading
When considering a prop firm and/or a forex broker for news trading, there are several important characteristics to look for:
- Guaranteed Execution of Pending Orders: During periods of high market volatility, it's crucial that the prop firm or forex broker can efficiently execute your pending orders. This ensures that your desired positions are opened at the specified time and conditions without delays or disruptions caused by slow server response times.
- Low Spreads: News events often lead to increased market volatility, which can result in wider spreads. It's advantageous to choose a prop firm or forex broker that offers competitive and low spreads, even during times of heightened market activity. This helps to minimize the costs associated with entering positions on assets affected by news releases.
- No Requotes: Requotes can occur when the requested price for a trade is not available, and the broker fills the order at the nearest available price. This can lead to slippage and potentially impact the profitability of your trades. Opt for a prop firm or forex broker that has access to a diverse pool of liquidity providers, as this reduces the likelihood of requotes and enhances trade execution efficiency.
By prioritizing the forex brokers used by prop trading firms with these characteristics, news traders can increase their chances of executing trades promptly, minimizing trading costs, and avoiding potential slippage issues associated with fast-moving markets during news events.
List of All Prop Firms Allowing Trading on News
Here is our full list of Prop Firms suitable for News Trading tested and reviewed by our experts
Prop firms allow news trading. This summary is updated; however, sometimes there are changes. Always confirm them with your prop firm.
||Prop firms allow news trading
|Alpha Capital Group|
|City Traders Imperium|
|FTMO||(Swing accounts) |
|Funded Trading Plus|
|FundedNext||(Evaluation & Stellar models) |
|Goat Funded Trader|
|Leveled Up Society|
|Lux Trading Firm|
|My Forex Funds|
|Smart Prop Trader|
|The Funded Trader|
|The Trading Pit|
|True Forex Funds|
The Best Prop Trading Firms in 2023
Things we liked:
Exclusive Discount Code (SBOCOUPON
Minimal rules & unlimited time for completion
Two-part assessment leading to $200,000 in funding
Scaling plan & fast-track funding opt
Things we didn't like:
New player in the funded account offering
An entry fee to sign up for the challenge.
Things we liked: FTMO charges a one-time fee only
FTMO has generous conditions for its traders
Things we didn't like: Complaints about the platform freezing
Complaints about lack of customer support
Things we liked:
it takes a low percentage cut on your profits
Things we didn't like: Not one-off payment
Challenges perceived to be too hard or pointless
View All Prop Firms
FAQs on Prop Firm for News Trading
Can trading the news be profitable?
Trading the news can be profitable if you can accurately interpret the news and its impact on the market. If you can anticipate the direction of the market based on the news, you may find yourself in a favorable position. However, it is important to exercise caution as misinterpretation can lead to costly mistakes.
How can I stay updated on important financial news for forex trading?
To stay informed about important financial news, traders can follow dedicated news apps or platforms. They can also subscribe to daily and weekly newsletters offered by news providers. Additionally, many prop trading firms and forex brokers provide market news and updates on their platforms or offer access to third-party news solutions.
Is news trading considered a highly risky strategy?
Yes, news trading is generally considered a high-risk strategy in the financial markets. The volatility and rapid price movements that occur during news releases can lead to substantial losses if not properly managed. It is crucial to be aware of the risks involved and exercise caution when implementing this strategy.
Why do some proprietary trading firms restrict trading around news events?
Proprietary trading firms impose restrictions to protect their profits and traders from excessively risky positions. News events can create significant price fluctuations, impact spreads, and liquidity, and increase the likelihood of financial losses. These restrictions aim to mitigate these risks.
What is the purpose of these restrictions?
The primary purpose is to protect the funded accounts of traders. By limiting trading during news releases, proprietary trading firms prevent traders from being exposed to uncontrollable market conditions that could lead to substantial losses. These restrictions provide a layer of protection to ensure traders do not risk losing their funded accounts.
What types of news events are usually restricted by proprietary trading firms?
Proprietary trading firms typically restrict news events that are considered "high-impact." These events have the potential to create significant market movements and volatility across various markets. One common example of a restricted news event is the non-farm payroll (NFP) report.
Where can I find information about restricted news events in real-time?
To provide traders with real-time visibility, most of the Proprietary trading firms offer free calendars that outline restricted news events and their likely impact on the markets.
If the prop firm does not allow news trading and suppose there is red news coming for USD. So in this can we trade other pair or should we stop trading on all pairs?
When it comes to news trading, all of the positions need to be closed 2min before the major news release that has a relation to the trading asset. Other assets can continue trading as normal.