News trading refers to making trading decisions based on major market-moving events such as economic reports, geopolitical developments, or earnings announcements. This strategy can be both exciting and highly profitable, as it takes advantage of the volatility triggered by breaking news. However, not all prop firms allow news trading due to its inherent risks and unpredictability.
What Is News Trading?
News trading involves analyzing and trading based on breaking news, economic data releases, and other impactful events in the financial markets. Events such as interest rate decisions, unemployment reports, inflation data, corporate earnings, and political developments can cause significant volatility in the markets, creating opportunities for news traders.
For example, if a country’s central bank raises interest rates, the value of its currency might rise in response. A news trader would capitalize on this price movement by entering trades before or right after the news release.
Why Is News Trading Popular Among Traders?
- High Volatility: News events often cause sudden, large price movements in the markets. This creates an opportunity for traders to make quick profits.
- Short-Term Profit Potential: News trading is typically focused on short-term price movements, allowing traders to make profits within a few minutes or hours of the news release.
- Market Predictability: While the exact price movement is unpredictable, market participants often react similarly to specific news events. Understanding these patterns can provide traders with an edge.
- Lower Time Commitment: News trading does not require hours of chart analysis or long-term planning. Traders can focus on specific events and react quickly.
However, news trading can also be risky, as markets can sometimes behave unpredictably after major news releases, making it important to choose the right prop firm that allows and supports this type of trading.
Prop Firms: What Are They?
A proprietary trading firm (prop firm) is a company that provides traders with access to their capital to trade financial markets. Instead of investing their own funds, traders use the prop firm’s money and in return, share a portion of the profits with the firm. This setup provides opportunities for traders to earn money without needing large amounts of their own capital.
There are two key components to prop trading:
- Capital Allocation: Prop firms allocate trading capital to traders based on their performance, skills, and risk management abilities.
- Profit Split: Traders share a percentage of their profits with the firm, typically ranging from 50% to 90%, depending on the firm’s terms.
Many prop firms have specific rules and guidelines about what kind of trading strategies are allowed. News trading, due to its fast-paced and high-risk nature, is not always permitted. Some firms allow it, but only under certain conditions, such as adhering to risk limits or avoiding certain high-impact news releases.
What Are the Best Prop Firms for News Trading in 2025?
While many prop firms focus on more traditional forms of trading like technical analysis or swing trading, there are several that support news trading. Here are some of the best prop firms that allow news trading in 2025:
1. FTMO
FTMO is one of the most popular prop firms in the world, known for its favorable conditions for traders. It allows news trading but has strict risk management rules. Traders are required to stick to their risk limits, and excessive risk-taking or losses during high-impact news events can result in the termination of the trading account. However, FTMO’s risk management system is robust, and traders who are disciplined in managing their trades during news events can profit from the volatility.
Key Features of FTMO for News Trading:
- Allowance for news trading, with no restrictions on major economic events.
- Specific risk limits that must be followed during news events.
- Traders are encouraged to use their news trading strategies with proper risk management.
2. TopstepTrader
TopstepTrader is a great option for traders who specialize in news trading. Known for its professional approach to risk management, Topstep allows traders to trade during major news events, as long as they are following their risk management parameters. The firm offers a unique program called “TopstepTrader Combine,” which assesses traders’ skills before funding them.
Key Features of TopstepTrader for News Trading:
- Offers a “news-friendly” environment with no specific restrictions on news trading.
- Provides a demo account for traders to test their strategies.
- Focus on risk management during news trading to ensure sustainable success.
3. The5ers
The5ers is a prop firm that allows traders to use various trading strategies, including news trading. They offer generous profit splits and a transparent evaluation process. Traders are encouraged to trade news events, but they must adhere to risk limits to avoid large drawdowns that can wipe out their accounts.
Key Features of The5ers for News Trading:
- Traders can use news trading strategies and take advantage of high-volatility events.
- Flexible risk management rules to help protect traders.
- Competitive profit splits and strong trader support.
4. City Traders Imperium
City Traders Imperium (CTI) has built a reputation as a prop firm that supports a wide range of trading styles, including news trading. Their evaluation process is designed to test traders’ skills in different market conditions, and they allow news trading during high-impact events. However, traders must follow the firm’s risk management strategies to avoid large losses.
Key Features of City Traders Imperium for News Trading:
- Allows trading during news releases.
- Risk management tools and systems in place to protect traders.
- Profitable scaling options and strong trader community support.
Key Factors to Consider When Choosing a Prop Firm for News Trading
When selecting a prop firm for news trading, here are some important factors to consider:
- Risk Management Policies: Ensure that the firm has clear risk management rules that are compatible with your trading style, especially if you trade news.
- Profit Split: Review the profit-sharing structure to ensure it is favorable for your trading style and goals.
- Evaluation Process: Most prop firms require traders to pass an evaluation period before receiving capital. Understand the requirements for news trading during the evaluation process.
- Platform Support: Ensure the firm offers a trading platform that supports fast execution, especially important when trading around major news events.
- Trading Instruments: Some firms may limit the instruments available for news trading. Make sure the firm offers the instruments you want to trade during news releases.
Conclusion
News trading offers exciting opportunities for traders to profit from high-volatility events, but it also comes with significant risks. Choosing a prop firm that supports this type of trading is crucial for traders who want to capitalize on these opportunities while maintaining risk control.
In 2025, several prop firms like FTMO, and TopstepTrader provide favorable conditions for news traders. As always, make sure you understand each firm’s risk management policies, profit-sharing structures, and evaluation processes before committing.
By carefully selecting the right prop firm and employing strong risk management strategies, news traders can take advantage of volatile market conditions and potentially see significant returns.
Frequently Asked Questions (FAQs)
Can I trade news events on any prop firm?
Not all prop firms allow news trading. Each firm has its own set of rules, and some may restrict trading during high-impact news events due to the volatility and potential for large losses. It’s important to choose a prop firm that specifically allows news trading.
What is the best strategy for news trading?
The best news trading strategy depends on the trader’s experience and the news event. Common strategies include straddle strategies (entering trades before the news is released) or reacting quickly to the news once it’s released. Proper risk management is crucial.
How much capital can I trade with in news trading?
The amount of capital you can trade with depends on the prop firm you choose. Firms like FTMO and MyForexFunds offer substantial capital, which allows traders to take larger positions during news events.
Are there any risks associated with news trading?
Yes, news trading can be risky. Market movements can be highly volatile and unpredictable. Slippage, unexpected market reactions, and gapping can all affect trade outcomes. It’s essential to have a solid risk management plan in place.
Can I use automated systems for news trading?
Some prop firms allow the use of automated systems or Expert Advisors (EAs) for news trading. However, it’s important to check each firm’s terms and conditions to ensure that algorithmic trading is permitted during news events.
