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E8 Markets News Trading Policy Explained

17 Apr, 2024

6 min

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E8 Markets News Trading Policy Explained

We understand that the initial news trading restriction caused concern among many of our traders. At E8 Markets, your feedback is incredibly important to us, and we’re always seeking ways to enhance your experience. We want you to know we take your concerns seriously.

After careful consideration and a thorough review of your feedback, we’re pleased to announce an updated rule regarding news trading. We believe this revised approach offers a more balanced solution that promotes both flexibility and responsible trading. Our goal with this adjustment is to address your concerns while protecting you from the inherent risks associated with high-impact news.

What is News Trading?

News trading, with its potential for sudden bursts of volatility and quick price swings, can seem like a tempting strategy for traders in evaluation programs. However, relying on news-driven luck contradicts the very purpose of these programs. Some traders may attempt to game the system by placing buy and sell stop orders around key news releases, hoping to pass the evaluation with a single fortunate trade. However, this demonstrates a fundamental misunderstanding of what our program seeks to achieve.

Our program isn’t about identifying traders who get lucky with news-driven trades. We’re seeking traders who demonstrate:

  • Strategic Thinking: Success in trading requires careful analysis, planning, and the ability to develop long-term strategies. News trading, with its focus on unpredictable events, undermines this core skill.
  • Risk Management: Disciplined adherence to trading plans and effective risk management are crucial for achieving long-term success. News trading encourages impulsive, risk-heavy decisions at odds with this discipline.

Our evaluation program aims to identify traders who possess these essential qualities.  Those who consistently demonstrate skill, discipline, and resilience to generate profits over the long term are the traders positioned for success in the realm of trading.

The Dangers of News Trading

While the potential for quick profits during news can appel to enter the market, several substantial risks make this a challenging strategy for many traders. Let’s break down the key dangers:

  • Extreme Volatility: News often causes sudden and drastic price swings in the markets. This volatility can make it incredibly difficult to manage open positions and stick to your risk management plan.
  • Unpredictability:  Even with careful analysis, markets don’t always react as expected.  Unexpected announcements, conflicting data, or even misinterpretation of figures can lead to sudden reversals.
  • Widening Spreads and Slippage:  During news, spreads (the difference between buying and selling prices) tend to widen significantly. This makes it more expensive to enter and exit trades.  Additionally, slippage becomes a factor, meaning your orders may not get filled at the price you intended, further diminishing control.
  • The “Gambling Mentality”: The excitement and volatility of news can cause traders to abandon their strategies and make impulsive decisions based on hope or fear.  This shift away from disciplined trading often leads to costly mistakes.

While professional traders may find ways to navigate some of these risks, news trading remains fundamentally riskier than other trading strategies.

Updated Rule – A Focus on Protection

To protect our clients and ensure a stable trading environment, we’ve implemented a rule regarding news trading.  News events can cause extreme market volatility, sudden price movements, widening spreads, and slippage – all of which increase the inherent risks.

🔗News Trading Rule

Because of these risks, we’ve made the decision to prohibit most news trading activities. You can find a full explanation of this rule, details on what’s prohibited, and exceptions for specific circumstances in our Help Center. The page also features an updated list of high-impact news events that fall under this rule.

Swing Traders Friendly

We recognize that many traders, particularly swing traders, may have positions open well before high-impact news events. To ensure fairness, swing traders who have opened their positions at least 8 hours prior to the scheduled news release and have both a stop-loss and a take-profit order in place will not be subject to the news trading restrictions. These measures help distinguish between traders who engage in planned, longer-term swing trades and those who are primarily focused on news-driven speculation.

Why Risk Management Matters

Our news trading rule highlights the core principle of responsible risk management. While high-impact news might seem like chances for quick gains, the unpredictable volatility they bring can overwhelm even the most seasoned traders. The risk of rapid, unpredictable losses far outweighs any potential short-term gains and amounts to gambling rather than strategic trading.

Our evaluation program isn’t about getting lucky on a few trades. It’s designed to identify traders who exhibit discipline, manage risks effectively, and demonstrate the potential for consistent profitability over the long run. Traders who take excessive risks, especially during volatile periods, are unlikely to achieve sustained success in the trading industry.

Being a successful trader isn’t just about finding winning trades— it’s about protecting your account so you can continue trading tomorrow, and the day after that. By prioritizing risk management, you demonstrate the wisdom and control that we look for in our traders. Your ability to navigate volatility responsibly will play a major role in your potential for success with E8 Markets.

Conclusion

This news trading rule aims to find the right balance between providing opportunities and fostering responsible risk-taking. We understand the desire to capitalize on market-moving events, but we also prioritize your long-term development as a trader. This rule reflects our commitment to supporting your growth and development as a trader.

At E8 Markets, we believe long-term success stems from discipline, strategy, and most importantly, effective risk management. We encourage all of our traders to explore and deepen their understanding of risk management techniques. By prioritizing these crucial skills, you will not only safeguard your trading account but boost your odds of achieving your goals within our programs and beyond.

Article topics

news trading
Trading Rule

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