News Trading Restrictions in Prop Challenges

News Trading Restrictions in Prop Challenges

In the world of funded trading challenges, understanding prop firm news trading rules is essential for any serious trader aiming to protect their evaluation progress and maintain compliance. While many strategies may seem effective during high-volatility events, not all of them are allowed within a proprietary firm’s guidelines. Ignoring these rules can result in disqualification—even if your trade is profitable.

Why News Trading Rules Exist in Funded Challenges

Prop firms, including Larsa Capital, operate with specific risk control measures in place. One of the strictest areas involves how traders interact with the market during economic news releases. News trading tends to generate sharp volatility, thin liquidity, and unpredictable price behavior. For this reason, most firms implement rules to mitigate the increased risk to capital.

These rules aren’t arbitrary. They are built to:

• Protect the firm’s capital from slippage and broker manipulation.

• Ensure that profits are achieved through skill, not luck during high-impact spikes.

• Maintain fairness for all participants across different time zones and news calendars.

Traders who don’t familiarize themselves with these restrictions may find themselves unknowingly violating the firm’s terms—even if their analysis was technically sound.

Types of News Trading Restrictions to Expect

Not all prop firms treat news trading the same way. However, there are several common formats of restrictions you’ll likely encounter:

1. Time-Based Entry Restrictions

Many prop challenges disallow opening new positions shortly before or after a scheduled high-impact economic release. This window typically spans from two minutes before to two minutes after the news event. For example, if Non-Farm Payrolls (NFP) is scheduled at 15:30 UTC, traders may not be allowed to open new trades between 15:28 and 15:32.

2. Position Holding Restrictions During News

In some cases, even holding existing positions through news events is prohibited. If a trader keeps a position open during a restricted news release, it may be flagged as a violation—even if it was opened hours earlier. Larsa Capital, for instance, applies clear-cut guidelines to help traders avoid such scenarios.

3. Instrument-Specific Rules

Not all instruments are treated equally. A news release affecting the USD might restrict trading on all major USD pairs (EUR/USD, USD/JPY, etc.). Meanwhile, trading GBP or AUD pairs might still be permissible unless impacted by relevant local news. This highlights the importance of reviewing which instruments are subject to restrictions on specific news days.

How to Track News Events and Stay Within the Rules

To stay informed about key economic events and remain compliant with trading rules:

• Use a reliable economic calendar to monitor upcoming scheduled events.

• Filter events based on impact level and the country involved.

• Align your trading times with the time zone used in the challenge (often UTC).

• Avoid opening or holding trades during restricted time windows around news releases.

Building a Strategy Within News Constraints

Restrictions on news trading may seem limiting at first, but they actually encourage more disciplined and consistent trading habits. Instead of relying on unpredictable volatility, traders are encouraged to:

• Trade during more stable market hours.

• Focus on technical setups that evolve over time rather than in moments.

• Manage risk more effectively with proper stop-loss placement.

• Analyze how news might indirectly affect market sentiment in the following hours or days.

This shift can ultimately create a stronger foundation for long-term success.

Violating News Rules: What Are the Consequences?

Failing to adhere to news trading rules can lead to severe penalties, especially during the evaluation phase. Depending on the firm’s policy, traders may face:

• Challenge disqualification.

• Profit invalidation from the violating trades.

• A reset requirement with no refund.

• Loss of eligibility for payout or funded account.

Larsa Capital prioritizes transparency by clearly outlining these conditions, so traders know where they stand at every step.

Using News Analysis Without Breaking the Rules

Just because prop firm news trading rules exist doesn’t mean traders must avoid news altogether. In fact, many successful traders build their entire approach around post-news market behavior. Here’s how:

• Wait for the initial volatility to settle, then enter based on breakout or rejection patterns.

• Use the reaction as confirmation for larger trend continuation or reversal.

• Monitor volume and candle structure rather than just the news figure itself.

By doing so, traders can benefit from news-related moves without violating the firm’s restrictions.

Best Practices to Stay Compliant

To trade effectively and safely within a funded challenge, follow these guidelines:

• Always check the news calendar before entering trades.

• Set alerts around major scheduled news events.

• Avoid placing trades in the restricted windows, even if the setup looks ideal.

• Read the firm’s rulebook regularly to ensure there have been no updates.

• Review trade history to make sure past entries don’t overlap with banned timeframes.

Conclusion

Complying with prop firm news trading rules is a non-negotiable part of passing a funded trading challenge. It reflects a trader’s ability to follow structure, manage risk, and build consistent performance without exploiting temporary market chaos. Although it might feel restrictive, these rules actually serve to level the playing field and reward disciplined traders who approach the market with skill and strategy.

Larsa Capital makes these expectations clear from the start, giving traders a reliable environment to prove themselves. By staying informed and adjusting your strategy around scheduled events, you’ll be far better prepared to succeed—without risking your account on a technicality.