Is News Trading Worth the Risk in Funded Accounts?

Is News Trading Worth the Risk in Funded Accounts?

Prop trading during news events often tempts traders with promises of rapid profits. With major economic releases causing sharp price swings, it’s easy to understand the appeal. However, when trading within funded accounts—where strict rules and risk parameters govern every move—the stakes are even higher. Before jumping into news-driven volatility, traders must weigh the potential rewards against serious risks.

In this article, we’ll explore whether news trading is a viable strategy within funded accounts, especially under the structure used by Larsa Capital. We’ll also discuss the main rules, common pitfalls, and professional alternatives to help you trade smart under pressure.

Why News Trading Is So Tempting

Economic news releases, such as interest rate decisions, employment figures, and inflation data, create intense market movement in short bursts. Traders often target these moments because:

• Volatility increases liquidity, allowing for rapid entries and exits.

• Potential for large moves means big profits in seconds.

• Market focus is narrowed, making it easier to predict directional bias.

But in prop trading environments, what appears as opportunity often comes with firm restrictions. Understanding these limitations is key to avoiding penalties or disqualification.

How Funded Accounts Regulate News Trading

Most proprietary trading firms, including Larsa Capital, implement restrictions on trading during economic news for a reason: to protect capital from erratic market behavior. Here’s why such measures are common:

• Unstable spreads and slippage: Prices can jump erratically, making it nearly impossible to execute planned entries and exits.

• Increased server load: High activity around news releases can impact execution quality or even trigger platform delays.

• Unrealistic performance metrics: Profits generated from news spikes may not reflect consistent skill, which is what funded firms aim to assess.

For instance, at Larsa Capital, trades opened within 5 minutes before or after high-impact news releases are not counted toward your evaluation profits. This policy discourages short-term speculative behavior and ensures a level playing field for all traders.

Risks of Prop Trading During News

The risks go beyond missed profits. Here are the main reasons news trading can backfire in funded accounts:

1. Rule Violations

Many firms have strict guidelines about news periods. Breaking these—even unknowingly—can result in disqualification or revoked payouts.

2. Psychological Pressure

The anticipation of a major release, followed by violent price action, often leads to impulsive decisions. Traders may enter prematurely or hold losing trades longer than planned.

3. Lack of Control

Even with a solid strategy, traders have no control over market reaction. An unexpected tone in a central bank statement, for example, can wipe out well-placed positions.

4. Invalid Trade Results

Some firms disregard trades placed during news events when calculating your overall performance, which can mislead your progress and sabotage your challenge goals.

Understanding the Larsa Capital Approach

Unlike some firms that allow news trading with open restrictions, Larsa Capital implements clear limits to promote disciplined and consistent trading. Here’s what traders should keep in mind:

• All trades executed within 5 minutes before or after impactful news are excluded from profit calculations.

• Losses from such trades, however, still count against your drawdown.

• These rules apply across evaluation and verified phases, not just during the challenge.

By enforcing these policies, Larsa Capital encourages traders to avoid luck-based results and instead develop sustainable strategies.

When Does It Make Sense to Trade News?

While most funded account guidelines discourage direct news trading, that doesn’t mean economic releases must be ignored completely. Here are alternative ways traders can integrate news awareness without breaching rules:

✅ Wait for Post-Volatility Pullbacks

Let the news hit and the dust settle. Once spreads normalize, the real trend often begins—allowing for more predictable and less risky entries.

✅ Trade with Bias, Not Reaction

Use the news to establish directional bias for the day. For example, a positive jobs report might strengthen a currency. Instead of reacting instantly, wait for confirmation.

✅ Swing Trade Beyond News Windows

If your strategy is based on longer timeframes, simply avoid initiating trades close to major releases. This avoids disqualification and erratic volatility.

Subtle Ways to Stay Competitive (Without Breaking the Rules)

Some traders feel restricted by prop firm rules—but creativity often wins. To maintain edge and stay compliant, try these approaches:

• Use economic calendars to time your trades outside restricted windows.

• Backtest your strategy to see how news affects your entries historically.

• Journal your trades, noting if news had an impact even indirectly.

• Follow Larsa Capital’s official news list to avoid surprises.

Remaining compliant doesn’t mean giving up on opportunities. It simply means learning how to spot them responsibly.

Prop Trading During News: Final Thoughts

Is prop trading during news worth the risk in funded accounts? The short answer is: not usually. While the potential upside is appealing, the downsides—rule violations, increased risk, and invalid profits—can derail even talented traders.

Success with a prop firm like Larsa Capital comes from consistency, discipline, and long-term strategy. Instead of chasing the chaos of news events, the best traders position themselves for steady performance.

By respecting the rules and focusing on sustainable techniques, you’ll not only stay in the game—you’ll thrive in it.