Funded traders who've never blown an evaluation on a good trade all know something about the 8:30am number that most retail accounts find out the hard way.
It's not their stop placement.
It's not their entry.
It's not a better broker or a faster platform.
It's not even their win rate.
Every one of them has taken a trade they were completely right about, and still watched the account eat a loss twice the size it was supposed to be.
Not because of the trade. Because of 6 minutes on the clock.
Funded-account traders have a name for what shows up in that window. They call it the 2.24x number.
Outside that world, this number rarely comes up, and once you see the math behind it, you'll understand why the traders who know it treat every red day on the economic calendar completely differently than everyone else.
Once you know where the 2.24x number comes from, a daily loss limit stops being a number you hope you don't hit. It becomes a number you can calculate around, on any day, with any release on the calendar.
The traders who already know the 2.24x number didn't learn it by guessing. They learned it from the exact math, laid out once, in dollars, on a hypothetical account. That's what's below.
A Trading Habits Report
The News Gap
What happens when a calculated risk meets a scheduled news release.
- Length 20 pages, with 8 original charts and two worked hypothetical case studies
- Author TradingHabits.com
- Format PDF, delivered as an instant download right after checkout
- Covers Why a stop-loss isn't a promise of a price, 3 real academic sources on news-driven volatility and liquidity, a 20,000-trial simulation, and the exact resizing mistake that doubles risk around a release
This report breaks down the research, the math, and the numbers on one specific decision.
What's Inside
20 Things This Report Actually Says
- 01The four exact forms this one decision takes, and why none of them require a single mistake in the original trade plan.Page 3
- 02The specific reason closing a position before a release feels wrong even when the math says it's the right move.Page 4
- 03Why being fine 9 times out of 10 is exactly the kind of evidence that keeps this habit alive.Page 4
- 04The one-sentence definition of a stop-loss order that most traders have never actually thought through.Page 5
- 05What liquidity providers do in the exact window a trader needs them the most, and why it isn't a conspiracy, it's their own risk management.Page 5
- 06The 1993 Journal of Finance study that already answered whether this volatility spike is real or just a story traders tell themselves.Page 6
- 07The two-stage market reaction from a 1999 Journal of Finance study, and why the quiet stage is the one that causes the actual damage.Page 7
- 08The three-stage sequence, mapped stage by stage, that turns a well-placed stop into a price level that never gets touched at all.Page 8
- 09The hypothetical $5,000 account, a 20-pip stop, and the release that was six minutes away when the trader decided to hold anyway.Page 9
- 10The exact multiple, more than double, that the planned risk turned into once the real spread and the real gap were accounted for.Page 10
- 11The dollar overshoot, as a percentage, between what this hypothetical trader planned to lose and what they actually lost.Page 10
- 12How a trade sized to fit perfectly inside a $50,000 funded account's remaining daily risk room can still be the trade that wrecks the day.Page 11
- 13The exact dollar amount, and the exact percentage, by which one FOMC trade pushed a correctly sized account over its daily limit.Page 12
- 14The 20,000-account simulation built to answer a question no single hypothetical trade can answer: what this habit costs over 100 trades, not one.Page 13
- 15The percentage of simulated accounts that ended below where they started, compared side by side between the group that cut size in half and the group that didn't.Page 14
- 16The three-regime breakdown showing exactly how often a news-window loss beats the plan by 50% or more, and why one regime hits 100% of the time.Page 15
- 17The exact yearly dollar figure this habit costs a trader taking just 3 trades a day, based on nothing but this report's own stated math.Page 16
- 18Why a trade that's correctly sized to fit inside a prop firm's daily loss limit can still be the trade that fails the entire evaluation.Page 17
- 19The one thing traders get wrong when they decide to "hold through it with a wider stop" instead of stepping aside.Page 18
- 20The four exact sentences traders tell themselves right before this decision, and the specific fact each one gets wrong.Page 19
HABITS
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Behind The Report
Market Microstructure Around News
A calm line, then a level that was never traded through. That's the gap this report is about.
The Concept
A stop-loss order is a price, not a promise. It fills against whatever liquidity actually exists the moment it's triggered, and during a scheduled high-impact release, that liquidity can be a fraction of what it was seconds earlier.
A stop calculated for a normal session, held through a rate decision or a jobs report without adjustment, gets tested against conditions it was never built for.
Where It Comes From
Louis Ederington and Jae Ha Lee's 1993 Journal of Finance paper, "How Markets Process Information: News Releases and Volatility," was among the first to measure exactly how much volatility spikes around scheduled economic announcements, rather than describing that it happens.
Michael Fleming and Eli Remolona's 1999 Journal of Finance study on the U.S. Treasury market documented a two-stage reaction: a sharp initial price jump, then a separate stretch where liquidity stays thin even after prices settle. Torben Andersen, Tim Bollerslev, Francis Diebold, and Clara Vega's 2003 American Economic Review paper found the same pattern across multiple markets. All three are measuring the same mechanical fact, and it's exactly what a stop sized for a calm market doesn't account for.
What Happens To The Spread The Moment News Hits
Illustrative shape, not a live feed: the two-stage pattern Fleming and Remolona documented in 1999, a sharp spread spike at the moment of release, then a slower return to normal rather than an instant one. A stop sized for the calm stretch on either side gets tested against the middle of this curve.
Try It: Step Through The Release
Illustrative multiplier derived from the same curve plotted above, anchored to the report's own cited spike of roughly six times normal at the moment of release, not a live feed. A stop sized for the calm stretch on either side gets tested against whatever this number is doing at the moment it's triggered.
Background only. The report itself works two case studies and a 20,000-account simulation of what trading full size through the news actually costs.
Common Questions
Is a stop-loss order guaranteed to fill at the price it's set at?
No. A stop is a price, not a promise. It fills against whatever liquidity actually exists the moment it's triggered, and during a scheduled high-impact release, that liquidity can be a fraction of what it was seconds earlier.
How much does the spread actually widen at the moment of a release?
Roughly six times normal at the instant of release, based on the report's cited research, before narrowing back down over the following minutes.
Does the market react to news all at once or does it keep moving afterward?
Both, according to research cited in the report. Michael Fleming and Eli Remolona's 1999 study on U.S. Treasuries found a sharp initial price jump followed by a separate stretch where liquidity stays thin even after prices settle, and Andersen, Bollerslev, Diebold, and Vega found the same two-stage pattern across multiple markets in 2003.
Sources & Further Reading
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Ederington, L. H. & Lee, J. H. (1993). “How Markets Process Information: News Releases and Volatility.” The Journal of Finance, 48(4), 1161-1191.
Among the first to measure exactly how much volatility spikes around scheduled economic announcements, rather than just describing that it happens.
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Fleming, M. & Remolona, E. (1999). Published in The Journal of Finance.
Documented a sharp initial price jump in the U.S. Treasury market, followed by a separate stretch where liquidity stays thin even after prices settle.
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Andersen, T., Bollerslev, T., Diebold, F. & Vega, C. (2003). Published in American Economic Review.
Found the same two-stage reaction pattern across multiple markets, not just Treasuries.