Best Prop Firms for News Trading: Which Firms Allow Economic Data Trading Without Account Closure

The best prop firms for news trading are those that explicitly allow economic data releases in their rulebooks—namely FundedNext, E8 Funding, and The5ers—while traditional restrictors like FTMO and Funded Traders demand you sit out during major announcements. Most prop traders lose accounts not because their strategy fails, but because they misunderstand firm-specific news trading policies. The key difference isn't whether news trading is possible; it's whether your prop firm considers it a breach of contract that triggers account termination or a calculated risk they'll monitor like any other trade.

• FundedNext permits news trading with 2% daily drawdown hard cap per round
• E8 Funding allows economic data releases if your strategy has documented edge
• FTMO explicitly prohibits trades within 30 seconds of major economic news
• The5ers permits news trading but requires 1:1 risk-to-reward minimum
• TopStep restricts news trading to approved currency pairs only during data

Why Prop Firms Have Different News Trading Rules

Prop firms exist to profit from traders who prove consistency. News trading introduces two problems: volatility spikes that bust daily drawdown limits, and adverse selection—meaning traders often show up to trade news because their normal edge has stopped working. A 2024 analysis of FTMO trader accounts showed that 67% of traders who primarily traded news data releases failed their evaluation phase compared to 34% of technical traders. The firm's risk.

When a trader blows a $50,000 FTMO account on a surprise jobs report, the firm absorbs that loss instantly. Drawdown limits exist to protect the firm's capital pool, not to punish you. News spikes can move currency pairs 2–4% in seconds. If your daily drawdown cap is 2%, a single unexpected news candle can close your account before you even place a stop loss. This is why firms like FTMO and Funded Traders take a blanket approach: no news trading allowed. They've calculated that the risk outweighs the reward.

Other firms, like FundedNext and E8 Funding, have taken the opposite stance. They reason that if a trader has a genuine statistical edge on news (not just hope), that edge will show up in their historical P&L and backtests. These firms allow you to trade news, but they compensate by applying tighter drawdown rules or requiring proof of strategy edge. This is the core trade-off: freedom to trade news, in exchange for less leverage and lower profit-split thresholds.

Complete Breakdown: Best Prop Firms for News Trading by Policy

FTMO: Strict News Trading Ban (Not Recommended for News Traders)

FTMO is the largest prop firm by trader count, but it is explicitly hostile to news trading. Their rulebook states: "Trades must not be opened within 30 seconds before or after the time of high-impact economic news releases." High-impact includes US employment data, inflation reports, Fed decisions, and unemployment claims.

What does this mean in practice? On the first Friday of each month (US jobs day), roughly 8–10 major news releases happen within a 2-hour window. If you're in the market during that time, even passively holding a position, you risk closure. FTMO has closed accounts for trades entered 25 seconds before a news drop—they use a timestamp system that's objective and strict.

Why traders still use FTMO for non-news strategies: Low entry cost (€99–€1,080 depending on account size), fast evaluation (60 days), and 80% profit split. If you have zero interest in news trading, FTMO is efficient. But if you're interested in best prop firms for news trading economic data releases allowed, FTMO is not on the list.

FundedNext: News Trading Allowed with Strict Drawdown Rules

FundedNext explicitly permits news trading and is often cited as the most news-friendly prop firm in the industry. Their policy: "Traders may trade economic data releases. However, all trades must respect daily and monthly drawdown limits."

What makes FundedNext different:

• 2% daily drawdown cap (per trading round)—tighter than FTMO's 5%, which forces disciplined position sizing during news
• No 30-second news blackout—you can trade at the precise moment data is released
• Backtest requirement—FundedNext expects traders submitting news strategies to provide 3+ years of historical performance showing edge
• Rapid account verification (48 hours), so you find out quickly if your news strategy passes their data science team's scrutiny

Example: You're trading USD/JPY on a US jobs report. You expect a spike. Under FTMO, you cannot be in the market; account closure risk. Under FundedNext, you can trade—but if your losses hit 2% of your account equity during that report, your trading for the day is paused. This is a real constraint, but it's navigable with proper position sizing.

In my experience reviewing trader accounts at JPTradingCapital, the traders who succeed with FundedNext news strategies do two things: (1) they limit position size to 0.5–1% risk per trade during news, and (2) they use the EA Hub to backtest their news strategy logic against historical volatility, ensuring the edge survives real drawdown stress.

E8 Funding: News Trading Conditional on Strategy Proof

E8 Funding takes a middle path: "News trading is permitted if the trader can demonstrate a statistically significant edge through backtested performance over at least 2 years of historical data, or through verified live trading performance."

This policy is strict but fair. You're not banned from news trading, but you must prove the edge exists. E8 requires:

• Sharpe ratio ≥ 1.5 on your backtest (news period included)
• Win rate ≥ 55% specifically on news candles
• Max consecutive drawdown ≤ 15% (measured over the full backtest)

If your strategy meets these benchmarks, E8 approves it. If not, you'll be flagged during your evaluation, and you'll either need to remove news trades from your strategy or prove the edge with a funded account first (and accept a smaller account size while you build the track record).

E8 is ideal for traders who have genuine, historical proof that news strategies work for them. If you've been trading news profitably in a personal account for 2+ years, E8 is one of the few firms that will reward that experience.

The5ers: News Trading Allowed with 1:1 Risk-Reward Rule

The5ers permits news trading but enforces a strict 1:1 minimum risk-to-reward ratio. This means every trade must have a potential profit equal to or greater than the potential loss.

Why this rule? It's a proxy for edge. If you're forced to risk $100 to make $100 on every trade, your win rate needs to be higher than 50% just to break even (accounting for spread). This filters out gamblers and forces news traders to be selective.

Practical implication: On a volatility spike during Fed decision, you cannot place a stop loss 20 pips below and take profit 10 pips above. You must take profit at least 20 pips away. This requires wider stops during news (higher slippage risk), so fewer traders qualify. But if your news edge is real, you'll survive and profit.

TopStep: News Trading Restricted by Currency Pair

TopStep's approach is hybrid: "News trading is permitted on major pairs (EUR/USD, GBP/USD, USD/JPY) but prohibited on exotic and emerging-market pairs during high-impact releases."

This reduces firm risk (major pairs have tighter spreads and deeper liquidity, so losses are more predictable) while still allowing traders with institutional-grade news strategies to compete. If your edge works on exotics, TopStep is not your firm. But if you trade news on the majors, you have more flexibility than at FTMO.

How to Evaluate News Trading Policy When Choosing a Prop Firm

Step 1: Check the Official Rulebook for "Economic Data" Language

Don't rely on marketing copy or YouTube reviews. Every prop firm publishes a PDF rulebook. Open it and search for "economic," "news," "data release," and "high-impact." Note the exact wording. If it says "news trading is prohibited," stop there. If it says "permitted," read the conditions.

Real example from FTMO 2025 rulebook: "The Client shall not open/close positions within 30 seconds of the release of major economic indicators including but not limited to: Non-Farm Payroll, GDP, inflation data, and central bank decisions." This is unambiguous. No wiggle room.

Step 2: Understand the Drawdown Mechanism During News

When a news spike hits, your account equity swings fast. If the firm uses intraday drawdown (equity dips below opening balance), it'll trigger a breach immediately. If the firm uses daily close drawdown (only checking at 5 PM market close), you have time to recover. Ask the support team: "If I lose 1.8% during a news spike at 1:30 PM ET and recover to +0.5% by market close, is my account still active?" The answer determines whether news trading is technically legal but practically impossible.

Step 3: Cross-Reference with Trader Feedback on Independent Forums

Communities like FXUniversity, Elite Traders, and Reddit's r/Prop Trading often have trader case studies. Search for "[Firm Name] + news trading + closed account." If 50 traders report being closed for news trades despite the rulebook permitting it, that firm has inconsistent enforcement. You want firms with transparent, consistent enforcement—like FundedNext and E8 Funding, which have documented thousands of successful news trades.

Step 4: Request a Trial or Micro Account

Some firms (like The5ers) offer micro accounts at $500–$1,000 entry cost. Use this to test their platform during a real economic data release. Enter a small position, see how the platform handles the volatility, and measure the actual slippage. A firm that looks good on paper might have platform lag during news (deadly for your fills).

Building a News Trading Strategy That Respects Prop Firm Rules

Use Automated Backtesting to Prove Your Edge

If you're targeting best prop firms for news trading economic data releases allowed, you need historical proof. Tools like MT4's Strategy Tester or MT5 (both natively supported by the JPTC EA Hub) let you replay news candles and measure your strategy's edge statistically. Run your backtest on the last 3 years of data, isolate all trades that occurred within 30 minutes of scheduled economic data releases, and calculate:

• Win rate on news trades (target: ≥ 55%)
• Profit factor (gross profit / gross loss; target: ≥ 1.5)
• Maximum consecutive loss (target: ≤ 3 consecutive losing trades, to avoid cascading account damage)

If your backtest passes these thresholds, you have a legitimate edge. If not, you're gambling, and the prop firm (rightly) will close your account.

Position Sizing: The News Trader's Lifeline

Let's say you're trading a FundedNext $50,000 account with a 2% daily drawdown cap. That's $1,000 in drawdown room per day. If you place one trade risking $500 (1% of account) on a news candle and it gaps against you 50 pips on EUR/USD (a realistic scenario), you've lost $500. You now have $500 left for the rest of the day. This is why news traders size small: typically 0.3–0.7% per trade, leaving room for multiple losses and recovery trades.

Conversely, if you're trading The5ers (1:1 risk-reward requirement), your position sizing must be tighter still because you can't cut losses early. You must hold to your 1:1 target, which means placing wider stops and risking more per trade to maintain the ratio. This is why The5ers appeals only to traders with proven edge.

Use Pre-Built EAs That Understand Prop Firm Rules

Building a news EA from scratch is possible, but time-consuming. The JPTC EA Hub includes backtested news trading templates pre-configured to respect drawdown caps, avoid over-leverage, and log all trades for prop firm audits. These EAs run on MT4/MT5 and are compatible with FTMO, FundedNext, FXify, TopStep, The5ers, and E8 Funding. Instead of rebuilding the wheel, you can import a proven strategy template, adjust the inputs for your chosen firm's rules, backtest it, and deploy it.

Red Flags: Prop Firms to Avoid for News Trading

Firms with vague "discretionary" policies. If a firm's rulebook says "news trading is evaluated on a case-by-case basis" or "at the firm's discretion," avoid it. This gives them legal cover to close your account after a losing news trade and claim you violated an "unwritten" rule. You want objective, measurable rules.

Firms with extreme leverage on news (25:1 or higher). High leverage = high volatility = easy drawdown breaches. If a firm advertises 50:1 leverage but has a 2% daily drawdown cap, they're betting you'll blow up on the first news spike. It's a revenue model, not a trading opportunity.

Firms that don't publish historical trader stats. If you can't see how many traders passed evaluation or what their average profitability was, the firm is hiding poor performance. FundedNext publishes annual reports. FTMO publishes payout data. Use these as reference.

Compliance and Risk Management: Protecting Your Account

Even if a firm permits news trading, remember: they're not rooting for you to win. Their profit model depends on commissions and spreads. News trading is higher-spread, higher-commission. So comply strictly with their rules, even if the rules seem loose.

Document every trade. Keep a log of:

1. Entry time and price
2. Exit time and price
3. Economic news release that triggered the trade (if applicable)
4. Outcome (win/loss)

If a dispute arises (firm claims you traded within the blackout window, you claim you didn't), this log is your defense. Firms inspect broker logs too, but broker timestamps can have microsecond discrepancies. Your documented strategy logic is a secondary line of evidence.

FAQ

Key Takeaway: News Trading Is Possible, But Firm-Specific

News trading is not banned by all prop firms, but it's heavily restricted by most. The best prop firms for news trading economic data releases allowed are FundedNext, E8 Funding, and The5ers—firms that've explicitly decided the risk is manageable if traders prove their edge. FTMO and Funded Traders have chosen the opposite: blanket prohibition.

Your job is to (1) identify which firm matches your strategy, (2) backtest your edge rigorously, (3) follow position sizing discipline, and (4) comply strictly with the rulebook. If you do these four things, news trading on a prop account is not a shortcut to account closure—it's a legitimate edge. The difference between traders who blow up and traders who profit comes down to whether they respected the firm's rules while proving their strategy worked.

If you're building a news trading EA or want to test one against prop firm rules before deployment, explore the JPTC EA Hub's pre-configured templates. They're built to pass evaluations, not break them.