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Why TradeDay Bans News Trading: The Full Explanation
TradeDay auto-liquidates all open positions 2 minutes before Tier 1 economic data releases and blocks new orders for 2 minutes after. This isn't a guideline—it's enforced by their trading platform. You don't get a choice. If you're holding ES contracts when CPI releases, your positions get flattened at market whether you like it or not. If you try to place orders during the 2-minute blackout window, they won't fill.
The reason is simple: TradeDay funds you with their capital, and news trading introduces catastrophic slippage risk that can blow through drawdown limits before anyone can react. When FOMC minutes drop or NFP numbers hit, orderbook liquidity evaporates. What should be a 2-tick stop loss becomes a 50-tick slippage disaster. TradeDay isn't willing to risk their capital on that volatility, so they eliminate the risk entirely by shutting down trading around major releases.
Here's everything you need to know about TradeDay's news trading ban—what triggers it, how the auto-liquidation works, which releases are restricted, and what happens if you try to abuse the policy.
Quick heads-up: This article is based on my real experience with TradeDay and the info available when I published/updated this. Things change in prop trading — rules, payouts, promos, all of it.
For the absolute latest, check TradeDay´s website or their faq page.
What Tier 1 Economic Releases Are
Tier 1 releases are the highest-impact economic data announcements that move markets violently within seconds. These are scheduled, predictable events that every serious trader marks on their calendar.
Major Tier 1 Releases TradeDay Bans:
- FOMC Meeting Minutes (Federal Reserve interest rate decisions)
- CPI (Consumer Price Index - inflation data)
- PPI (Producer Price Index)
- NFP (Non-Farm Payrolls - employment report)
- Unemployment Rate
- Crude Oil Inventories (weekly, every Wednesday 10:30 AM ET)
- FOMC Press Conference (when Chair speaks after meetings)
- GDP Reports (Gross Domestic Product)
Additional Tier 1 Events:
- Treasury auctions (specific sizes)
- USDA crop reports
- EIA petroleum status reports
- Retail sales data
- Housing starts and building permits
TradeDay maintains a calendar of Tier 1 releases accessible in the members area Trading Room. There are embedded calendars from Investing.com and other services showing exact dates and times. It's your responsibility as a trader to know when these releases happen and avoid them.
Release times change occasionally. Sometimes daylight saving shifts times. Sometimes releases get delayed or rescheduled. Always check the current economic calendar—don't rely on memory or assumptions.
How TradeDay's Auto-Liquidation Works
TradeDay doesn't rely on you to manually close positions before news—they force-close everything through automated systems.
The Exact Process:
T-minus 2 minutes: Platform auto-liquidates all open positions at market price. Every contract you're holding gets closed immediately. You have zero control over the fill price—it's a market order sent automatically.
Working orders canceled: All limit orders, stop orders, or any pending orders in the orderbook get canceled. Your entire order management gets wiped clean.
Trading disabled: For 2 minutes before and 2 minutes after the release, you cannot place new orders. The platform blocks order entry entirely. If you try to click Buy or Sell, nothing happens.
T-plus 2 minutes: Trading re-enables. You can start placing orders again once the 4-minute blackout window ends.
Why 2 Minutes Each Way: This isn't arbitrary. TradeDay learned through decades of floor trading experience that liquidity drops off significantly 2 minutes before major releases. Traders pull resting orders from the orderbook because they want to see the data first before committing capital. By T-minus 2 minutes, the orderbook is thin enough that slippage becomes dangerous.
After release, it takes about 2 minutes for algorithms and institutional traders to digest the data and start placing meaningful size in the orderbook again. Before that 2-minute window ends, you're trading in an artificially thin market where a 5-lot order can move price 10 ticks.
Important: Platform-Level Enforcement
This isn't honor system. TradeDay's trading platforms (Tradovate, NinjaTrader, TradeDayX) have the auto-liquidation coded into the connection. When your platform connects to TradeDay's servers, their risk management system overrides your local controls. You can't disable it. You can't bypass it. You can't "forget" and leave positions open—they'll get closed for you.
What Happens If You Accidentally Violate
TradeDay explicitly states they do NOT fail traders for accidental news trading violations. This is important because early-stage traders make mistakes. You might forget about an EIA report. You might not realize FOMC was today. You might be in a trade that's up $800 and CPI is in 90 seconds—too late to manually close before auto-liquidation hits.
Accidental Violations:
- System auto-liquidates your positions
- You might take slippage losses from the forced market orders
- No rule violation assessed
- Account continues normally
- No reset required
Abuse of the Policy:
If TradeDay's compliance team sees a pattern of you consistently trading into news events, placing orders right at the T-minus 2-minute threshold, or otherwise gaming the system, they'll classify this as "abusing the policy." At that point:
- Funded account: Terminated, regardless of profitability
- Evaluation account: Failed immediately
- Future evaluation access: Potentially denied
What constitutes abuse? Trading into news once or twice in a month = accident. Trading into news 10+ times = abuse. The exact threshold isn't published, but the pattern is obvious. If you keep doing it despite auto-liquidations and warnings, you're demonstrating inability to follow risk guidelines.
Why TradeDay Won't Let You Trade Tier 1 News
The fundamental issue is liquidity collapse and slippage risk. During normal market conditions, if you need to exit a 5-lot ES position, there's enough liquidity in the orderbook to fill you within 1-2 ticks of mid-market. Your stop loss at -10 points gets you out at -10 to -11 points maximum.
What Happens During Tier 1 Releases:
Orderbook depth drops by 80-90%. Instead of hundreds of contracts resting at each price level, there might be 5 contracts. Your 5-lot order consumes the entire visible book at that level, forcing your fill to walk up the book until it finds matching size.
Real Example from February 2023 CPI:
Trader held 3 MES contracts (Micro E-mini S&P). Stop loss set at -$300. CPI came in hotter than expected. Market dropped 40 points in 8 seconds. Stop loss triggered, but fills came back at -$680 instead of -$300. The slippage: $380 on a 3-contract position that should have cost $300 max.
Why such extreme slippage? Liquidity vanished. Every resting sell order in the book got consumed in those 8 seconds. By the time the trader's stop hit, there was no liquidity until 15 ticks lower.
TradeDay's Perspective:
They funded you with $50,000 of their capital. Your max drawdown is $2,000. In the example above, a trader lost an extra $380 to slippage beyond what their stop should have cost. That's 19% of their entire drawdown allowance burned on slippage alone.
Now multiply that across 100 funded traders. If even 10% of them are holding positions during news, TradeDay is exposed to unpredictable slippage events that could violate multiple accounts simultaneously, costing tens of thousands in capital losses beyond agreed-upon risk limits.
They eliminate this risk entirely by forcing everyone out 2 minutes before news. No exceptions.
Floor Trading Perspective: Why News Trading Is a Trap
TradeDay's founder has decades of floor trading experience, including trading pits during major data releases. Here's what they learned that informed the news trading ban:
The Old Floor Strategy:
Floor traders would flatten positions before major releases. Then, when the data hit the wire, they'd try to "front-run" large institutional orders by jumping on broker resting orders before the "real money" (banks, hedge funds, asset managers) could get positioned.
This worked—sometimes—because floor traders had physical proximity advantages. They could see which brokers were working client orders, which brokers had stops to fill, and they could conspire (illegally, but it happened) to work their own stops against client orders.
Why It Doesn't Work Now:
You're not on the floor. You're at home with a laptop. You have zero visibility into true orderbook depth or institutional order flow. You have no idea where the real liquidity is or where the smart money is positioning.
Banks and institutions spend millions on analysts and models to predict data releases. They still get it wrong more often than right. You think you can outpredict them from your home office with a TradingView chart?
The Core Lesson:
Trying to predict market direction ahead of Tier 1 data assumes the data is predictable. It's not. Analysts provide consensus estimates, but those estimates are wrong constantly. The market reaction is even less predictable—sometimes "good" data causes sell-offs because it changes rate expectations.
News trading is gambling, not trading. It's hoping for a coin flip to go your way while accepting catastrophic risk if it goes against you. TradeDay isn't in the gambling business.
Strategies That Don't Work (And Why Traders Try Them Anyway)
New traders see NQ move 300 points in 2 minutes after FOMC and think "If I could catch just 50 points of that, I'd make $1,000 per contract!" This thinking leads to several flawed strategies:
Strategy 1: The Straddle
Place a buy stop above market and a sell stop below market right before the release. When data hits, one order triggers and catches the move. The other cancels.
Why It Fails: Requires liquid orderbook to guarantee fills at your intended prices. During news, you don't get the fills you expect. Both orders might trigger due to whipsaw, doubling your loss. Or you get filled 20 ticks away from your intended entry, immediately putting you underwater.
Strategy 2: The Bracket
Enter a position 30 seconds before news with tight stop and wide target. Let the volatility hit your target.
Why It Fails: Your stop gets hit with massive slippage due to illiquid conditions. Your "tight stop" at -$200 fills at -$600. Even if direction is right, slippage can trigger your stop before price moves in your favor.
Strategy 3: The "I'll Just Watch" Approach
Don't have positions on, but watch the release and enter immediately after based on the data.
Why It Fails: By the time you react, institutional algorithms have already positioned. You're chasing. The initial move is often a fake-out before the real directional move happens 5-10 minutes later. You end up entering at the worst possible time.
Why Traders Keep Trying:
Because the big moves are exciting. It's psychologically captivating to see 100-point swings. The fantasy of catching that move overrides the reality that most traders lose money trading news. TradeDay's ban exists because they know traders will keep trying these strategies despite evidence they don't work—so they remove the option entirely.
Related TradeDay Rules
- TradeDay Prohibited Practices - Complete list of banned strategies
- TradeDay Trading Hours - Permitted times and daily close requirements
- TradeDay Evaluation Rules - All eval requirements including news restrictions
- TradeDay Funded Account Rules - How news ban applies after funding
- How to Pass TradeDay Evaluation - Avoiding common violations
- TradeDay Maximum Drawdown Rule - Why slippage matters for drawdown
- TradeDay Lost Funded Account - What happens if you abuse news policy
- TradeDay Slippage Rule for Funded Live Traders - Additional risk management for live capital
FAQ: TradeDay News Trading Ban
Does TradeDay ban all news trading or just Tier 1 releases?
Only Tier 1 releases are restricted. You can trade during Tier 2 or Tier 3 economic data releases (retail sales, housing data, jobless claims, etc.). The ban specifically targets the highest-impact releases that cause liquidity collapse.
What happens if I forget about a news release and get auto-liquidated?
Your positions close at market 2 minutes before the release. You might take slippage losses from the forced exit. But you don't fail your evaluation or lose your funded account—accidental violations are tolerated. Just don't make it a pattern.
Can I have working orders in the orderbook if I'm not in an active position?
No. All working orders (limit orders, stop orders, pending orders) get canceled 2 minutes before Tier 1 releases. The platform won't let you maintain any orders during the blackout window.
How do I know when Tier 1 releases are scheduled?
TradeDay provides economic calendars in the Trading Room section of the members area. Use Investing.com calendar, Forex Factory, or any major economic calendar. Set phone alerts for major releases so you don't forget.
Will I get a warning before auto-liquidation happens?
No. The platform doesn't send warnings. It's your responsibility to know when releases happen and manage positions accordingly. Some traders set alarms for 5 minutes before major releases to manually exit rather than rely on auto-liquidation.
Does the news ban apply during evaluations and funded accounts?
Yes. The ban applies to all TradeDay accounts: evaluation, Funded Sim, and Funded Live. The rules are identical across all stages. Auto-liquidation is always enforced.
What if I'm in a winning trade and don't want to close before news?
Too bad. Platform auto-liquidates 2 minutes before release regardless of your P&L. If you're up $1,500 and want to hold, you can't. The system closes you out. Lesson: don't enter trades within 30 minutes of major releases.
Can I trade immediately after the 2-minute post-release window?
Yes. Once the blackout ends (2 minutes after release), trading re-enables. But be careful—volatility remains extreme for 5-10 minutes after major releases. Wide spreads and erratic price action make this a dangerous time to trade even though it's technically allowed.
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