News trading restrictions are rules that limit or prohibit a trader from holding positions around scheduled high-impact news events. The rule exists because major economic announcements such as central bank decisions, employment reports, and inflation data can create sudden, unpredictable price movements that produce large gains or losses in seconds, distorting the risk model the firm is set up to manage.

Firms enforce news trading restrictions in different ways. Some prohibit any open positions within a defined window around a scheduled release, typically 2 to 5 minutes before and after. Others allow positions to remain open but exclude profits generated during the restricted window from counting toward the profit target or payout calculation. 

For traders, the practical effect depends on strategy. Day traders and news specialists are directly affected. Swing traders holding positions overnight may need to close or hedge before major releases.