News trading
News trading is opening or holding positions around scheduled economic releases — central bank rate decisions, inflation prints, employment reports — to capture the sharp moves they trigger.
Around a high-impact release, liquidity thins and the spread widens moments before the number hits; the first seconds afterward bring gaps and slippage, so orders fill far from their intended prices and stop-losses offer no exact protection. Strategies range from directional bets on the outcome to straddles that try to catch the move in either direction.
Prop firms care because those seconds can defeat their risk rules — a stop filled through a gap can carry an account past its daily loss limit in one print — and because simulated execution around news can fill orders a live market would not have filled at those prices.
In a prop-firm challenge
Challenge phases are commonly unrestricted, while funded accounts commonly carry a news rule: no opening or closing trades within a short window — commonly a few minutes either side — of designated high-impact events on the affected instruments, with positions opened well in advance often allowed to run through. Violations are treated as soft breaches at many firms, voiding the profits of the offending trades, with repetition putting the account itself at risk. The windows, event lists, and penalties differ enough between firms that they are worth reading before the first funded week; they are collected in news trading rules at prop firms.