What is red folder news?
A high impact US release. You have to be flat through the window around it, and on these accounts holding a position through one is a hard breach.
Red folder means the high impact entries on the economic calendar: payrolls, CPI, the FOMC rate decision and their equivalents.
You have to be flat from a minute before the release until a minute after it. Opening a position inside the window counts the same as holding one through it, because the rule is to be flat rather than to finish the window in profit.
On a daily payout account this ends the account rather than the day, and it counts even if the trade was profitable. Nothing is flattened for you when it happens: the position is the breach, and closing it would rewrite what you were holding when the release printed.
Nothing stops you trading into the window either. Being stopped would hide the rule, and the rule is the point. The terminal warns you in a banner while a window is open and for fifteen minutes after it, and the calendar is on the red folder events page.
The window is judged on the tape's clock, not your wall clock. Because the feed runs behind, the release reaches your chart later than it reaches the exchange, and the rule follows what you were shown.