The Ultimate Guide to News Trading Rules
Broker Policies, Execution Risks, and Market Microstructure: What every trader needs to know about trading high-impact events in 2026.
Introduction: What is News Trading?
News trading involves taking positions before, during, or immediately after major economic releases (like NFP, CPI, or FOMC meetings) to capitalize on sudden volatility. While the concept is simple—buy on good news, sell on bad—the implementation is governed by a complex web of broker policies, liquidity constraints, and execution mechanics.
Why Brokers Care About News Trading
Contrary to popular belief, most legitimate brokers don't hate winners. However, news trading presents specific systemic risks that brokers must manage:
- Liquidity Vacuum: During a major release, Liquidity Providers (LPs) often pull their orders to avoid toxic flow, leaving the order book thin.
- Execution Load: A sudden influx of thousands of orders in milliseconds can strain matching engines.
- Risk Pass-through: Brokers operating an STP (Straight Through Processing) model may struggle to hedge client positions instantly during price gaps.
Types of News Traders
1. Deviation Traders
Traders who use software to instantly execute based on the difference between the 'Forecast' and 'Actual' data numbers.
2. Pre-News Positioners
Traders who analyze sentiment and technical structure to enter before the release, betting on the market's reaction direction.
3. Straddle/Bracket Traders
Placing Buy Stop and Sell Stop orders above and below the current price to catch the breakout, regardless of direction.
4. Institutional Arbitrage
High-frequency firms executing based on millisecond latency advantages across different liquidity venues.
Retail Broker Policies: The "Hidden" Rules
Retail brokers generally do not explicitly ban news trading. Instead, they use "market condition" clauses to protect themselves. You will often see terms like:
- ⚠️ "Abnormal Market Conditions": Allows the broker to widen spreads or reject orders.
- ⚠️ "Variable Spreads": Spreads can (and will) expand significantly (e.g., from 0.1 pips to 20 pips) during NFP.
- ⚠️ "Slippage Policy": Orders are filled at the "next best available price," which can be far from your stop or entry.
Broker News Trading Analysis by Region
We analyzed the top brokers globally to see how they handle news event execution.
🌏 Asia / Asia-Pacific Brokers
| Broker | News Trading Allowed? | Execution Pros | Execution Cons (Risk) |
|---|---|---|---|
| IC Markets | Yes | Deep ECN liquidity, fast execution | Spread widening, slippage likely |
| Exness | Yes | High leverage, flexible withdrawal | Price jumps, variable execution |
| Pepperstone | Yes | Fast tech, no strategy bans | Spreads expand significantly |
| XM | Yes | Wide instrument range | Market execution slippage |
| Tickmill | Yes | Scalping friendly | Liquidity gaps at NFP |
🏛️ Europe Brokers (FCA/CySEC)
| Broker | Policy | Pros | Cons |
|---|---|---|---|
| IG Group | Allowed | Enterprise-grade execution | Wider spreads during volatility |
| XTB | Allowed | Fast platform (xStation) | Historical slippage events |
| Trading 212 | Allowed | User-friendly UI | Variable spreads can be harsh |
| FxPro | Allowed | No strategy restrictions | Requotes possible on MT4 |
🇺🇸 USA Brokers (CFTC/NFA)
| Broker | Policy | Pros | Cons |
|---|---|---|---|
| OANDA | Allowed | Regulated, strong API | Significant slippage on major news |
| Interactive Brokers | Allowed | Institutional routing | Complex margin requirements |
| FOREX.com | Allowed | Reliable US regulation | Not optimized for HFT scalping |
Prop Firm Trading Rules: A Different Ballgame
| Prop Firm | News Trading Rule | Key Restrictions |
|---|---|---|
| FTMO | Restricted (on Funded) | No trading ±2 min before/after high-impact news on standard funded accounts. (Allowed on Swing accounts). |
| FundedNext | Allowed | Generally allowed, though recent updates suggest profit weighting (e.g., profits during news count less towards targets). |
| Funding Pips | Variable | Rules change frequently; typically allowed but with tight risk/drawdown monitoring. |
| TopStep | Allowed | Futures focused. Generally allows trading through news but warns of risk. |
| The 5%ers | Allowed | Robust program allowing most strategies including news, subject to standard risk limits. |
Execution Microstructure: What Actually Happens?
Understanding "Market Microstructure" is what separates professionals from gamblers. Here is the sequence of events during a Non-Farm Payroll (NFP) release:
- T-minus 10 seconds: Algorithmic Liquidity Providers (LPs) widen their spreads to reduce exposure.
- T-minus 1 second: The order book "thins out." Bids and Asks disappear.
- T-zero (News Release): Data hits the wires. Algorithms react in microseconds.
- Price Gap: The price jumps from 1.1050 to 1.1090 instantly without trading at prices in between.
- Slippage: Stop orders at 1.1060 are triggered but filled at 1.1090 (Negative Slippage for sellers, Positive for buyers potentially).
Institutional Players: The "Big Boys"
Retail traders are swimming in a pool with sharks. Institutional firms do not use "funded accounts"—they trade billions in proprietary capital.
Conclusion: The Real Rulebook
News trading is not about "cheating" the market; it is about understanding the infrastructure limits. The rules are defined not just by what brokers say in PDFs, but by what their technology can physically handle.
To succeed in 2026:
- Know your Broker: Use ECN brokers for pure execution, but expect slippage.
- Check Prop Rules: Never assume news trading is allowed on a funded account—read the FAQ every month.
- Respect Volatility: Use lower leverage during news to survive the spread widening.
Best Practices Checklist
- ✅ Use Limit Orders instead of Market Orders where possible.
- ✅ Avoid trading the first 30 seconds of a release.
- ✅ Use a VPS for low-latency execution.
- ✅ Monitor Economic Calendars (ForexFactory, Investing.com).
- ✅ Understand the difference between ECN and STP execution.
- ✅ Cap your risk per trade to 1% or less.
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