← Back to Blog · 2026-10-04 · 8 min read · Challenge Guide

You know the scenario. You're five trading days into your futures evaluation, up nicely, feeling sharp. Then one session — one stubborn trade you refuse to cut — wipes out a week of discipline and puts you within a whisker of the daily loss limit. You don't fail because you can't trade. You fail because you never built rules that made blowing the limit mechanically difficult.

That's the difference between traders who pass evaluations and traders who collect failure emails. Evaluations don't test whether you can make money. They test whether you can lose money slowly and on purpose. This guide gives you seven rules designed exactly for that — written for anyone trading or preparing to trade Chinese commodity futures, where contract specs, session structure, and volatility behavior differ enough from CME products to punish imported habits.

First, Know What You're Actually Risking: The Contract Math

Before any risk rule makes sense, you need to internalize one thing: Chinese futures contracts are sized very differently from what most global retail traders are used to. If you've never checked the specs, stop here and actually look them up on the exchange websites (SHFE, DCE, CZCE, INE). A few examples worth memorizing:

Two things jump out. First, a single lot of iron ore moves 50 CNY per tick — roughly $7 — so a 30-tick adverse move is over $200 on one lot. Second, crude oil at 1,000 barrels per lot is a genuinely large instrument; one lot of SC is closer to two mini contracts of WTI in notional terms than to a micro. When traders blow daily loss limits, it's almost never because their stop was wrong. It's because they were implicitly risking three to five times more than they thought, due to contract multiplier math they never did.

Rule zero, then: convert every stop distance into actual currency before you enter, not after. If your stop is 40 ticks on iron ore, that's 2,000 CNY per lot. Know that number cold.

The Seven Rules

Rule 1: Risk a Fixed Fraction of the Daily Loss Limit, Not a Fixed Number of Lots

Say your evaluation has a daily loss limit of $1,000. Most traders treat that as a wall they approach at full speed. Instead, decide upfront that no single trade may risk more than 20–25% of the daily limit — so $200–250 in this example. That means even a catastrophic sequence of losses takes multiple bad trades to threaten your day, and one normal-sized loss never ends your evaluation.

This flips the psychology. When the max damage per trade is a quarter of your daily budget, cutting a loser is easy. When one trade can end the challenge, you hesitate at the stop — and hesitation is where accounts die.

Rule 2: Build a Buffer Between Your Stop and the Limit

Your platform's daily loss limit includes slippage, fees, and the gap between where you want your stop and where it actually fills. Chinese commodity futures can move fast at the open and close of sessions, and night sessions on some products can be thinner than daytime liquidity. If your daily limit is $1,000, your personal hard stop for the day should be around 60–70% of that — say $650. That buffer absorbs slippage on a fast market, a double-fill mistake, or a fee you forgot to count.

Traders who set their mental daily stop at 95% of the limit are essentially betting their evaluation on perfect execution. Perfect execution doesn't exist.

Rule 3: Size Positions From Volatility, Not From Gut Feeling

Once you know your per-trade risk budget, position size is just arithmetic: lots = risk budget ÷ (stop distance × tick value). If you're risking $200 and your iron ore stop is 40 ticks at 50 CNY per tick (~$7), that's roughly 280 CNY... wait, 40 × 50 = 2,000 CNY, or around $280 — so zero lots. Your stop is too wide for your budget, or your budget is too small for that setup. Either way, the math just saved your account.

A practical way to set stop distances is to use recent volatility — for example, a multiple of the average daily range or a structure-based level below your entry. Volatility in Chinese commodities is real: thermal coal's policy-driven rally and collapse back in 2021, and the crude oil crash in early 2020, are both well-documented reminders that these markets can travel several percent in a day. Size for the market you actually trade, not the one you wish you traded.

Rule 4: One Position at a Time Until You're Proven

During an evaluation, run a strict one-position rule. No pyramiding, no hedging a loser with a correlated product, no "second entry" while the first is underwater. The reason is correlation — and in Chinese commodities, correlations are stronger than newcomers expect. If you trade rebar and iron ore simultaneously, you're often just doubling one trade: both sit at the heart of the steel production chain and tend to move together. The same logic applies across the black-chain complex and, to a lesser degree, within related agricultural products.

Two positions that look like diversification but behave like one doubled position is the most common hidden risk in a futures evaluation. One position, one thesis, one stop. Add complexity only after you've passed.

Rule 5: Respect the Clock — Chinese Session Structure Is Different

Chinese futures markets have a rhythm that catches off-guard anyone trained on US hours:

• Day sessions run with breaks — typically a mid-morning break, a long lunch break, and an afternoon close (most products close at 15:00 China time).
• Night sessions exist for many major products but vary: some start at 21:00 and run to 23:00, some to 01:00, and a few to 02:30. Some products have no night session at all.
• Liquidity concentrates around the day open, the pre-lunch window, and the afternoon close. Night session depth varies a lot by product.

Practical application: avoid the first five to ten minutes after any session open until you have data on how your product behaves — the opening auction and immediate aftermath can produce fills far from your intended stop. And never carry a day-trade position through a long break assuming the market will "wait for you." News that drops during the Chinese lunch break or overnight can gap a product straight through your stop when trading resumes.

Rule 6: Pre-Commit to a Shutdown Trigger

Decide, in writing, before the session starts: "If I hit my daily stop, I close the platform. No exceptions, no 'one more to get back to even.'" The daily loss limit isn't just a constraint — it's a gift. It gives you a legitimate, external reason to walk away, which is exactly the discipline most traders can't generate alone.

Two additions that make this rule stick:

• Loss-streak shutdown: three consecutive losing trades ends the day, even if you're only down half your daily stop. Streaks correlate with being out of sync with the market.
• Revenge-check: if you feel the urge to increase size after a loss, that's the signal to close the terminal, not to double down.

Traders fail evaluations in clusters of bad minutes, not bad months. The shutdown trigger compresses your worst-case day into something survivable.

Rule 7: Plan the Whole Evaluation, Not Just Each Day

Zoom out. An evaluation is a multi-day campaign, and the risk rules should reflect that. A few campaign-level habits:

• Trade fewer days, better. You don't need to trade every session. Sit out days with major macro releases, policy announcements, or holidays that thin liquidity. Chinese markets also have their own holiday calendar (Golden Week, Spring Festival) around which liquidity and volatility behave unusually — check it.
• Track your daily loss usage. Keep a simple log: how much of the daily limit each day consumed. If you're regularly using 80%+ of it, your position sizing is wrong regardless of P&L.
• Decide your "boring mode" in advance. If you get ahead of your profit target pace, the temptation is to press. Resist. In an evaluation, protecting the trajectory matters more than maximizing any single day.

The evaluation doesn't reward your best day. It rewards the absence of your worst one.

Putting It Together: A Sample Risk Framework

Here's how the seven rules look as a concrete checklist for a hypothetical evaluation with a $1,000 daily loss limit, trading one product — say, rebar on SHFE:

• Max risk per trade: $200 (20% of limit) — Rule 1
• Personal daily stop: $650 (65% of limit, leaving a buffer) — Rule 2
• Position sizing: stop distance × 10 CNY/tick × lots ≤ 200 USD equivalent; if the setup needs a wider stop, size down or skip — Rule 3
• One lot, one position until consistently profitable across many sessions — Rule 4
• Trade windows: day session only, skip the first 10 minutes after open, flat before long breaks — Rule 5
• Shutdown: hard close at $650 daily loss or 3 straight losers — Rule 6
• Campaign plan: trade 3–4 focused days per week, skip event-heavy sessions, log daily limit usage — Rule 7

Notice what this framework doesn't include: profit targets per day, hot tips, or predictions about where iron ore is "going." That's the point. Passing a futures evaluation is an exercise in controlled losing. The profits come from letting your edge express itself over many small, survivable trades — not from any single heroic session.

Test the Rules Before You Risk Anything Real

Rules that live in your head aren't rules — they're suggestions. The only way to find out whether your sizing math, session timing, and shutdown discipline actually hold up is to run them against real market data under evaluation conditions. That's exactly what we built XS Select for: a China futures evaluation where you can test your complete risk framework on real Chinese commodity futures data — rebar, iron ore, soybean meal and more — with clear daily loss limits and evaluations starting from $29. Run your seven rules against it, see which ones you actually follow, and adjust from there. The traders who pass evaluations aren't the ones with the best predictions. They're the ones whose rules made failure expensive to choose.