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Hash Hedge Blog
NEWS TRADING ON A FUNDED ACCOUNT: OPPORTUNITIES AND RISKS
News Trading on a Funded Account: Opportunities and Risks
Many prop trading firms restrict or completely prohibit trading during major news events.
The reason is simple: volatility can spike dramatically. After an important economic release, prices can move sharply within seconds, and slippage can cause your Stop Loss to execute at a worse price than expected.
On a Funded Account, a sudden move like this can quickly push you beyond your Daily Loss Limit or Total Loss Limit.
Crypto prop firms that allow news trading, including during major macroeconomic events, give traders more flexibility in how they approach the market. Major announcements often trigger some of the fastest and most significant price movements in crypto.
For traders, this creates opportunities to trade increased volatility, but it also introduces additional risk.
Just because news trading is allowed doesn't make it safer or more predictable. Slippage, position sizing, and Funded Account loss limits become especially important during these events.
Table of Contents
Why Macroeconomic News Matters for Crypto
Which Events Have the Biggest Impact on Crypto?
Crypto-Specific Market Catalysts
Two Approaches to News Trading: Fading and Momentum
Managing Risk When Trading News on a Funded Account
When It's Better to Stay Out of the Market
Making the Economic Calendar Part of Your Trading Plan
Key Takeaways
Why Macroeconomic News Matters for Crypto
In the stock market, news about an individual company primarily affects that company's shares.
Major macroeconomic events, such as Federal Reserve decisions or inflation reports, have a much broader impact. They can move stock indexes, currencies, bonds, and entire market sectors at the same time.
Crypto markets are sensitive to these events, too.
Changes in expectations around interest rates, inflation, or economic growth can shift investors' appetite for risk and trigger price movements in Bitcoin, Ethereum, and other cryptocurrencies.
For example, if markets begin expecting higher interest rates, demand for risk assets may weaken.
During these periods, Bitcoin can move in the same direction as major U.S. stock indexes, including the NASDAQ. When expectations improve and risk appetite increases, the opposite can happen.
However, the correlation between crypto and stocks isn't constant. It can strengthen or weaken over time, so NASDAQ movements shouldn't be treated as standalone trading signals for Bitcoin.
The takeaway for crypto traders is simple: even if you only trade BTC or ETH, it's worth keeping an eye on the economic calendar.
A single major announcement can affect several open positions at once.
Leverage and Liquidations Can Amplify Price Movements
In crypto markets, sharp price movements following major news can be amplified by mass liquidations of leveraged positions.
For traders on a Funded Account, this adds another layer of risk: higher volatility increases the likelihood of slippage and losses that exceed the amount originally planned.
Let's look at the events most likely to trigger these movements.
Which Events Have the Biggest Impact on Crypto?
Not every news release causes a significant market reaction.
For crypto traders, the most important events are those that can quickly change market expectations and trigger a spike in volatility.
Federal Reserve Decisions (FOMC)
Federal Reserve meetings and interest rate decisions are among the most important macroeconomic events for crypto markets.
And it's not just the rate decision itself that matters.
The FOMC statement, press conference, and comments from the Fed Chair can all trigger significant market reactions.
FOMC (Federal Open Market Committee) is the Federal Reserve committee responsible for key monetary policy decisions, including setting the target range for the federal funds rate.
What matters most is often the difference between what the market expected and what the Fed actually announced.
If the decision or accompanying comments are more hawkish than expected, such as signaling higher rates or tighter monetary policy for longer, risk assets may come under pressure.
A more dovish message, on the other hand, may support demand for risk assets.
But market reactions don't always follow the same pattern.
Sometimes the rate decision is already priced in, and traders react more strongly to details in the statement or comments made during the press conference.
FOMC meeting dates are announced in advance, giving traders time to prepare and assess the risks associated with their open positions.
Inflation Data (CPI)
CPI (Consumer Price Index) is one of the main measures of inflation in the United States.
It's released monthly and can significantly influence market expectations about the Fed's next moves.
Once again, it's not just the number itself that matters.
The difference between the actual reading and market expectations often drives the reaction.
Higher-than-expected inflation may increase expectations of tighter monetary policy, putting pressure on risk assets.
Lower-than-expected inflation may increase the likelihood of the Fed easing monetary policy.
The initial market reaction can be particularly aggressive.
In the first seconds and minutes after a CPI release, traders face an increased risk of slippage and rapid price movements in both directions.
Employment Data (Non-Farm Payrolls)
Non-Farm Payrolls (NFP) is a monthly U.S. employment report that measures job growth outside the agricultural sector.
It matters to crypto markets primarily because labor market conditions influence Federal Reserve policy.
Strong employment data may give the Fed more room to maintain restrictive monetary policy.
Weak employment data may increase expectations of monetary easing.
But there's no simple rule that says "strong NFP = Bitcoin goes down."
The market's reaction depends on how the numbers compare with expectations, other details in the report, current Fed policy, and broader market conditions.
Crypto-Specific Market Catalysts
Beyond macroeconomic data, crypto markets are also influenced by events directly related to the industry.
Bitcoin ETF Flows
Significant inflows into and outflows from spot Bitcoin ETFs can provide insight into institutional demand for BTC.
Rather than focusing on a single day's numbers, traders should pay attention to sustained periods of large inflows or outflows.
Protocol Upgrades and Hard Forks
Major upgrades to Ethereum and other blockchains, hard forks, new technology launches, and protocol changes can increase volatility in the affected assets.
However, markets may begin pricing in these events well before they happen.
As a result, the price movement leading up to an upgrade doesn't necessarily continue after the event itself.
Regulatory Developments
Regulatory decisions, legislative changes, and enforcement actions involving crypto companies or specific products can trigger sudden market repricing.
Unlike FOMC meetings or CPI releases, these developments aren't always scheduled in advance, making them harder to prepare for.
Large-Scale Liquidations
A high concentration of leveraged positions can amplify an existing market move.
When price reaches liquidation levels, forced position closures can push the market further in the same direction, triggering additional liquidations.
Traders can monitor some of these risks through open interest, funding rates, leveraged positioning data, and exchange inflows.
However, these indicators can't reliably predict exactly when a liquidation cascade will begin or how large it will become.
For traders on a Funded Account, the key difference is predictability.
FOMC, CPI, and NFP releases follow a schedule, so you can plan around them.
Regulatory announcements and large liquidation events can happen unexpectedly, so their risks need to be considered at all times.
Two Approaches to News Trading: Fading and Momentum
There are different ways to trade price movements triggered by news.
Two common approaches are fading the initial move and trading with the momentum.
They differ in entry timing, trade logic, and risk.
Fading the Initial Move
After a major news release, the market's first reaction can sometimes be excessive.
Price moves sharply in one direction, sweeps liquidity beyond nearby levels, and then partially or fully reverses.
Structurally, this can resemble a liquidity sweep, but with significantly higher volatility.
The idea behind fading the move is not to jump in during the first few seconds after the announcement.
Instead, traders wait for the initial move to develop and look for signs of a potential reversal.
For example:
News release → Sharp price move → Liquidity sweep beyond a key level → Price moves back → Reversal confirmation → Potential entry
Traders can use previously identified support and resistance levels, order blocks, FVGs, and highs and lows from previous trading sessions to evaluate the reaction.
The biggest risk with this approach is that the initial move may not be a false breakout.
It could be the beginning of a sustained trend.
That's why a sharp price move alone isn't enough reason to automatically trade against it.
Trading With Momentum
The second approach focuses on trading in the direction of the move that develops after the news.
Instead of looking for a reversal, traders look for confirmation that the initial move has established a new direction.
Before the release, you can identify the broader market context and important price levels.
But the actual directional bias becomes clearer only after the market reacts.
For example:
News release → Strong momentum → Break of structure → Pullback → Directional confirmation → Potential entry
This approach allows traders to join a move if the news genuinely acts as a catalyst for trend continuation.
However, entering during the initial reaction carries a higher risk of slippage and sudden reversals.
Both approaches follow the same principle:
News creates movement, but news alone isn't an entry signal.
The decision to enter comes after evaluating price action and market structure.
Managing Risk When Trading News on a Funded Account
News trading on a Funded Account requires extra attention to risk management.
A sudden price movement can do more than create a loss on an individual position.
It can quickly bring your account close to its Daily Loss Limit or Total Loss Limit.
What to Do With Open Positions Before a News Release
Before a major scheduled announcement, decide what you're going to do with any existing positions.
Holding a trade through FOMC, CPI, or NFP means accepting the risk of sharp price movements and potential slippage.
Even if your original trade setup remains valid, a temporary volatility spike can significantly increase your unrealized loss.
That's why the decision to hold through a news event should be part of your trading plan, not something you decide a few minutes before the release.
Before the event, check:
How much room you have before reaching your Daily Loss Limit and Total Loss Limit
Your position size
Your Stop Loss placement
The potential impact of slippage
Whether your strategy allows you to hold positions through major news events
If your strategy isn't designed for trading through these events, you can reduce or close your position beforehand.
Stop Loss Placement During News Events
A Stop Loss that works under normal market conditions may be too tight during a major announcement.
After a news release, price can quickly move through several technical levels before reversing.
And because of slippage, your Stop Loss may execute at a different price than the one you set.
When fading the initial move, the stop is typically placed beyond the level that would invalidate the reversal setup.
For example, this could be the extreme of the initial price spike, adjusted for current volatility.
When trading with momentum, the Stop Loss should also be placed beyond the setup's invalidation level rather than at an arbitrary fixed distance from entry.
If market conditions require a wider stop, position size should be adjusted so that your predefined risk per trade doesn't increase.
When It's Better to Stay Out of the Market
Not every major price movement needs to be traded.
Unexpected events can be especially difficult because there's often no opportunity to prepare a trading scenario in advance.
Examples include:
Unexpected regulatory announcements that trigger sharp repricing of individual assets or the broader market
Problems at major exchanges or other market participants, including hacks, withdrawal suspensions, or liquidity issues
Sudden price movements during periods of low liquidity, when even relatively small order flows can move prices significantly
Under these conditions, technical levels may behave differently, and slippage risk can increase sharply.
If unexpected news breaks while you already have an open position, your response should follow your predefined risk management rules and account for how close you are to your Funded Account's loss limits.
Most importantly, don't increase your risk simply because you're hoping the market will reverse.
Making the Economic Calendar Part of Your Trading Plan
Before each trading session, check the economic calendar and note the times of major announcements.
This helps you identify when market conditions could change dramatically.
For important events, you can follow a simple process:
1
Before the release:
Review your open positions, check your remaining loss-limit buffer, and determine whether your strategy allows you to hold trades through the announcement.
2
During the initial reaction:
Don't assume the first price movement establishes the market's final direction. Volatility and slippage risk are especially high during this period.
3
After the initial move:
Evaluate whether a new market structure has formed, whether liquidity has been swept, and whether conditions support a fade or continuation setup.
4
Once the market stabilizes:
Return to your regular analysis. Identify the new market structure, order blocks, FVGs, and liquidity zones created after the announcement.
Don't rely solely on whether an economic event is labeled high, medium, or low impact.
The actual market reaction depends on how much the released data differs from expectations and how important that indicator is in the current macroeconomic environment.
News Trading at Hash Hedge
At Hash Hedge, there are no restrictions on trading during news events.
Traders can open and close positions during major macroeconomic announcements.
This gives you more flexibility than prop firms that prohibit trading during specific windows before and after important releases.
However, being allowed to trade news doesn't remove the Daily Loss Limit or Total Loss Limit rules.
Sharp price movements, unrealized losses, and slippage can still cause you to breach those limits.
The ability to trade FOMC, CPI, NFP, and other major events should be viewed as additional flexibility within your trading strategy, not a reason to enter trades simply because news is being released.
Key Takeaways
1
Major macroeconomic events, including FOMC, CPI, and NFP, can significantly increase volatility in crypto markets.
2
Two common news trading approaches are fading the initial move and trading with the momentum that develops afterward.
3
News alone isn't an entry signal. Evaluate price action, market structure, and the conditions defined by your strategy.
4
On a Funded Account, risk management needs to account for more than your Stop Loss. Slippage, unrealized losses, and your remaining loss-limit buffer also matter.
5
If increased volatility requires a wider Stop Loss, adjust your position size to keep your predefined risk unchanged.
6
Unexpected regulatory developments, major exchange problems, and sharp movements during low-liquidity periods can create conditions where staying out of the market is the better decision.
7
Check the economic calendar before every trading session so you can prepare for scheduled events.
At Hash Hedge, news trading is allowed, but the Daily Loss Limit and Total Loss Limit continue to apply as usual.
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