Buy the Rumor, Sell the News in Crypto: A Prop Trading Plan to Stay Funded

In Brief

Headlines are the spark—liquidity is the fuel. In crypto, the story is often just the excuse for a move that was already set up by positioning and stop placement.
You need rules, not reactions. A prop trading plan built around day types, mapped liquidity, and confirmation keeps you from donating drawdown during news spikes.
The goal isn’t to “win the headline.” It’s to protect capital, stay consistent, and keep your funded trader status through disciplined risk management.

You’ve seen it: a big political statement hits the wires—“pro-crypto,” “revolution,” “regulation clarity”—and the crowd braces for an instant pump.

Then Bitcoin sells off.

If you were emotionally positioned for upside, that drop doesn’t just hit your PnL. It hits your identity as a trader. You start hunting for explanations: Was it buy the rumor, sell the news? Is the market numb to politics now? Is macro drowning everything out?

Here’s the funded-trader reality: the market is not obligated to react the way the headline suggests. Your job isn’t to be right about the story. Your job is to be paid by structure, and to survive the volatility without violating prop firm rules.

This guide gives you a news-resistant framework you can execute under evaluation and funded-account drawdown limits—without gambling on the first candle.

Headlines Don’t Move Crypto—Liquidity Does

News feels causal because it’s easy to point to. Price moves. A headline appears. The brain connects the dots.

But in liquid markets like BTC and ETH, the cleaner explanation is usually:

Narrative explains the move after it happens.
Liquidity enables the move (where large orders can be filled).
Positioning determines who gets forced to act (late longs, underwater shorts, over-leveraged traders).

On headline days, the market often behaves like a vacuum cleaner. It goes where the orders are.

The most common “rumor → news” sequence in crypto

Rumor builds → price trends as traders position early and late.
Obvious liquidity forms above highs and below lows (stops, breakout entries, take profits).
News hits → volatility expands (spreads widen, candles stretch).
One side gets cleared (stop run / liquidation), then direction becomes clearer.

That “Bitcoin dumped on good news” feeling is frequently just this:

The crowd was already long.
Stops were clustered.
The headline provided the perfect moment to run those stops.

Tip that pays: If the headline is widely anticipated, the trade is rarely “the news.” It’s the liquidation event around the news.

Why “Buy the Rumor, Sell the News” Blows Up Prop Accounts

“Buy the rumor, sell the news” is popular because it captures a real phenomenon: expectations get priced in early.

But funded accounts are where that saying becomes dangerous—because most traders apply it like a one-line strategy.

Prop trading forces a different objective:

Your #1 edge is survival. Passing the Challenge and staying funded is about avoiding drawdown cliffs.
You can’t average down or “give it room.” Daily loss limits and max drawdown punish emotional holding.
Consistency matters. One chaotic news session can ruin a week of steady execution.

The real trap is psychological: you start trading what you believe should happen.

You size up because you feel certain.
You hold through noise because you label it “manipulation.”
You take revenge trades because you feel wronged by the market.

From a funded-trader seat, here’s the rule:

Prop trading truth: The market can be unfair and still take your money. Your only defense is risk management you can follow when stressed.

Narratives vs Structure: The Funded-Trader Filter

To become news-resistant, you need to separate two things every time you trade headlines.

Narrative Bias (what you believe)

This includes:

Political promises and speeches
Adoption stories
“Pro-crypto” vs “anti-crypto” personalities
Moral judgments (good actor / bad actor)

Narrative bias isn’t useless—but it’s not executable.

Trade Structure (what you can execute)

This includes:

Market regime (trend vs range)
Key levels and liquidity zones
Volatility expectations (news = wider ranges)
Invalidation points (where you are objectively wrong)

Your edge as a funded trader is structure first, narrative second.

If you take nothing else from this article, take this:

In an uptrend, don’t short just because you distrust the headline.
In a downtrend, don’t buy just because the headline sounds bullish.

When macro dominates, headlines become timing—not direction

In risk-off regimes, BTC often trades like a high-beta risk asset:

Tight liquidity conditions = rallies get sold.
Higher volatility = more stop-hunts and fakeouts.
Headlines = a timing trigger, not a directional guarantee.

That’s why your plan must tell you what to do when the headline hits—without requiring you to predict the “correct” reaction.

The Prop-Friendly “Rumor vs News” Trading Plan (Step-by-Step)

This is the ruleset I want you running on headline days. It’s designed for prop trading constraints: limited drawdown, daily loss limits, and the need for repeatable execution.

Step 1: Classify the day (No Trade / Reduced Risk / Normal)

Decide your day type before the event window.

No Trade Day if:

You’re close to your daily loss limit (within ~1R–2R)
You’re emotionally loaded (you need a win)
Volatility/spread is abnormal for your instrument

Reduced Risk Day (recommended most of the time) if:

Major scheduled event (CPI/FOMC, policy speech, major political statement)
You haven’t proven your edge in news volatility

Normal Day only if:

You have a backtested setup that benefits from volatility
You can define entry, invalidation, and exit rules clearly

Tip that keeps you funded: The best funded traders don’t trade more to prove skill—they trade less to protect their equity curve.

Step 2: Map liquidity like a sniper

Before the headline, mark the obvious pools:

Prior day high/low
Weekly high/low
Equal highs / equal lows (clean stop magnets)
Untouched swing highs/lows
Range boundaries (consolidation edges)

Then write down:

Where stops likely sit (fuel)
Where you’ll be wrong (invalidation)

If you can’t define invalidation, you’re not trading. You’re hoping.

Step 3: Separate three phases: rumor leg, reaction, real move

Rumor leg: the move into the event (positioning builds)
News reaction: the first violent move (often a stop run)
Real move: what happens after the stop run—reclaim or failure confirms direction

Most prop traders lose money trading the reaction.

Most consistent prop traders make money trading the reclaim/failure after the reaction.

Step 4: Use the 3-candle rule to avoid chop

Choose your execution timeframe (5m or 15m is ideal for most funded traders).

Rules:

Let the initial spike happen.
Wait for 3 full candles to print after the headline moment.
Only then look for one of these confirmations:
- Reclaim + acceptance: price closes above a key level and holds
- Failure + rejection: price wicks above a level, closes back below, then fails the retest

This one filter prevents a huge percentage of news-day impulse entries.

Step 5: Trade only one of two setups (no freestyle)

On news days, you’re allowed to trade one playbook, not your entire imagination.

Setup A: Liquidity Sweep → Reversal (mean reversion)

Use this when price grabs stops and snaps back inside the range.

Criteria:

Price sweeps a major high/low (prior day/weekly level, equal highs/lows)
Strong rejection wick
Market structure shifts back inside the prior range
Retest fails (that level becomes a ceiling/floor)

Execution:

Entry on retest failure
Stop beyond sweep high/low
Target 1: mid-range
Target 2: opposite side liquidity

Trade management note: On reversals, pay yourself earlier. Mean reversion can stall fast.

Setup B: Break → Retest → Continuation (trend continuation)

Use this when the news spike breaks structure and the market accepts the new level.

Criteria:

News spike breaks a key level
Price retests the level and holds (acceptance)
Volatility compresses briefly (tight range)
Continuation expansion follows

Execution:

Entry on retest hold
Stop just beyond retest low/high
Target: next liquidity zone (prior swing, weekly level)

Tip for clean execution: If you can’t explain whether you’re trading reversal or continuation, you’ll manage the trade wrong—guaranteed.

Step 6: Hard risk limits (non-negotiable for a funded trader)

Keep the math simple enough that you’ll follow it under stress:

Max 2 attempts per day on headline volatility
Risk 0.25R–0.5R per attempt (smaller than normal is the point)
If trade #1 loses, trade #2 must be A+ only
If you go 0–2, you’re done (no “one more to get it back”)

This is how you protect your drawdown and avoid the spiral that kills Challenges.

Common Headline-Trading Mistakes (and the Fix)

Mistake 1: Trading your opinion of the headline

When you anchor to the personality or politics behind the news, you’ll start forcing trades.

Fix: Put it in writing in your journal:

“My job is structure, not judgment.”

Your chart doesn’t care what you think is true. Your prop dashboard cares whether you controlled risk.

Mistake 2: Confusing volatility with opportunity

Big candles feel like fast money. But they also mean:

wider stops
more slippage
more fakeouts

Fix: Reduce size and reduce frequency.

If your normal risk is 1R per trade, a headline window is not the time to prove bravery. It’s the time to prove professionalism.

Mistake 3: Entering the first spike

This is the #1 funded-account killer.

Fix: Add a rule you can’t negotiate with:

No entries in the first 60 seconds after the headline
If you’re a swing trader: no entries in the first hour

Your edge is not being first. Your edge is being right after the market reveals its hand.

Mistake 4: Needing the market to validate your intelligence

You “called” the headline. Now you want the market to reward you.

That’s ego trading.

Fix: Track process metrics instead of prediction metrics:

Did I follow my day type?
Did I map liquidity?
Did I wait for confirmation?
Did I respect max attempts?

A funded trader is a process athlete.

Mistake 5: Not asking who is trapped

This is the real engine behind buy-the-rumor, sell-the-news:

Rumor leg builds a crowd.
News creates the liquidity event.
The crowd gets punished.

Fix: Before every headline trade, answer:

Who’s trapped right now?
Where are their stops?
What level forces them to exit?

If you can’t answer, you don’t have a trade. You have entertainment.

The 30-Day Habit System: Become News-Resistant

A plan only matters if you can repeat it.

Here’s a simple 30-day structure designed for prop trading consistency.

Your pre-news checklist (print this)

[ ] What’s the market regime (trend/range; risk-on/risk-off)?
[ ] What are the two biggest liquidity zones above and below?
[ ] What’s my day type (No Trade / Reduced / Normal)?
[ ] What’s my max loss today in dollars and R?
[ ] Which setup am I allowed to trade: Sweep→Reversal or Break→Retest?
[ ] What’s my invalidation?
[ ] If I lose once, what must be true to take trade #2?

Your post-news journal prompts (5 minutes)

Did I trade the spike or the confirmation?
Did I reduce risk appropriately?
Did I respect the 2-attempt rule?
What did price do at my liquidity zones?
What one adjustment improves next time?

The 30-day rule

For the next 30 days, on any day you expect headlines to matter:

Trade half size.
Take max 1–2 trades.
Screenshot the chart before entry and after exit.
Grade execution A/B/C (execution, not outcome).

Tip worth adopting: You don’t get paid for intensity. You get paid for discipline.

A Realistic Scenario: “Good News” and a BTC Sell-Off

Here’s what this looks like when you actually execute it.

You see a bullish political headline. Social feeds turn euphoric. The urge is to buy immediately.

Instead, you:

Mark yesterday’s high/low and a clear weekly level.
Notice BTC has already pushed up for two sessions (classic rumor leg).
The headline hits: price spikes above yesterday’s high, then wicks hard and closes back below.
You wait for the 3-candle rule.
Price retests the level and fails.

That’s Setup A: liquidity sweep → reversal.

But if the opposite happens—price breaks the level, retests it, holds, and compresses—you have Setup B: break → retest → continuation.

Same headline. Two valid outcomes. One ruleset. No ego.

That’s how you stop being surprised by the market doing the “wrong” thing.

Your Next Action Step

Pick one upcoming headline window (macro release or scheduled speech) and commit to this exact process:

Reduced risk
Liquidity mapped
No first-spike entries
Two attempts max
Journal execution

Do that for a month and you’ll build something most traders never develop: headline immunity.

If you’re serious about passing and keeping a funded account, Fondeo.xyz is built for traders who want a rules-based path—not a hype-based one. Start your funded trader journey at Fondeo.xyz and build a news-resistant system that protects your drawdown and your confidence.

Stay sharp,
Jason Salomon