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News trading rule

A prop-firm restriction on holding or opening positions within a window around major economic releases.

Many firms prohibit trades within a few minutes before and after high-impact events on the economic-calendar, such as nfp, cpi, and fomc. Violations can void profits or end the account, even when the trade was profitable.

The rule exists because news spikes produce slippage that would hurt a firm with real capital, and because they produce outsized gambling wins in simulation.

Example: a firm bans positions from 2 minutes before to 2 minutes after tier-1 news. A trader long ES through the 8:30 a.m. NFP release breaches the rule regardless of outcome.

Related: economic-calendar, nfp, cpi, fomc, slippage

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Slippage on a market orderA buy order clears four price levels, so the average price paid is worse than the price first quoted.Buy 1,000 shares at marketpricesell orders resting (bar length = size)20.04300 shares20.03200 shares20.01200 shares20.00300 sharesnothing resting at 20.02order sweeps up the bookaverage fill 20.02SLIPPAGE0.02 a share$20.00 in totalintended 20.00Each level fills at its own price; the average is what you really paid.
Slippage on a market order. You click at 20.00, but only 300 shares are resting there, so the rest of the order fills at 20.01, 20.03 and 20.04. The average price paid is 20.02, and that two-cent gap is slippage.

Educational only, not advice. Spotted an error? Post in Site Feedback.