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

Picture this: it's 9:00 a.m. in Shanghai, the day session just opened, and you're down 1.8% on the day. One more losing trade and you breach the 2% daily loss cap. Your total drawdown allowance for the entire evaluation is 5% — and you still need to grind out +29% to pass. Most traders in this spot do the worst possible thing: they double up to "get it back." This article is about how to never end up in that spot in the first place.

A +29% target with a 5% max drawdown and a 2% daily loss cap is not a sprint. It's a structured campaign where the constraints — not the target — dictate every decision you make. Let's build the plan properly.

First, Understand What the Math Is Actually Asking of You

Before you pick a single instrument, sit with these numbers:

• Reward-to-drawdown ratio: You're being asked to make roughly 6x your maximum allowable loss. That means your system needs a genuine edge — not just decent risk management. Risk management keeps you alive; edge gets you to +29%.
• Daily cap as a pacing tool: A 2% daily loss cap means even your worst day costs you less than half your total drawdown budget. You can survive two or three bad days. You cannot survive a week of them.
• Implied win-rate flexibility: If you risk 0.5% per trade and target 1% per trade, you need roughly 20 net winning trades to hit +29%. That's a marathon of small, repeatable edges — not three heroic swing trades.

The traders who fail evaluations like this rarely blow up in one trade. They bleed: a 0.8% loss here, a revenge trade there, and suddenly the 5% drawdown is gone in four sessions. Your plan's first job is to make bleeding impossible.

Position Sizing: The Engine of the Whole Plan

With a 5% drawdown allowance, your per-trade risk should be small enough that no realistic losing streak threatens elimination. Here's the logic I'd use:

Set per-trade risk at 0.4%–0.6% of the account

At 0.5% risk per trade, you can absorb 10 consecutive full losses before hitting your 5% drawdown. Ten straight losses at your full stop distance is rare for any system with a defined edge — but you've now built a plan where even that disaster doesn't end you. If your strategy wins around 45–55% of the time with a 1:1.5 to 1:2 reward-to-risk profile, streaks of 5–7 losses will happen over a long campaign. Plan for them.

Translate risk into lots using real contract math

This is where most traders get sloppy. You must convert your risk budget into lots using the actual tick value of the contract. Here are the specs for some of the most liquid Chinese commodity futures:

Worked example: say your evaluation account is 100,000 yuan and you risk 0.5% per trade — a 500 yuan budget. You want to trade rebar with a 20-tick stop. At 10 yuan per tick, that's 200 yuan of risk per lot, so you can take two lots. If your stop needs to be 40 ticks wide (a choppier day, wider structure), that's 400 yuan per lot — you take one lot. The stop distance and the tick value decide the size, never the other way around.

Cap concurrent risk, not just per-trade risk

Add a portfolio rule: total open risk across all positions should never exceed 1.2%–1.5% of the account. Two rebar trades and an iron ore position can quietly stack into 2%+ of exposure if you size each in isolation. Chinese commodity futures are also heavily correlated through the construction and energy complex — rebar, iron ore, and coking products frequently move together. Treat correlated positions as one bucket with a shared risk budget.

Choose Instruments That Match the Constraint, Not Your Ego

The 2% daily loss cap punishes volatility misjudgment. A contract that regularly swings 3–4% intraday can eat your daily cap with a single badly-timed entry, even with a "correct" directional view. When you trade Chinese commodity futures for an evaluation, favor:

• Deep liquidity: Rebar and iron ore are among the most actively traded futures contracts in the world. Tight spreads mean your stops get filled near where you placed them — critical when your survival depends on stop discipline.
• Tradeable intraday ranges: Rebar, methanol, and soybean meal tend to offer structured, technical movement that suits defined-risk intraday and short-swing approaches.
• Avoid event-driven landmines during the evaluation: The 2021 thermal coal rally — when Chinese coal futures roughly doubled in a matter of months before exchange interventions and policy measures triggered violent corrections — is the classic case study. Contracts driven by a single policy narrative can gap through stops in both directions. That's exactly the environment where a 2% daily cap becomes a coin flip. There's money in those moves, but an evaluation with a 5% drawdown limit is not the place to hunt it.

Similarly, remember the 2020 oil crash, when WTI went negative and energy complexes worldwide saw moves nobody's stop-loss model anticipated. Chinese contracts have daily price limits that cap single-day moves, which helps — but limit-locked markets can also trap you in a position you can't exit. Know each contract's daily limit and avoid holding thin, limit-prone markets overnight during an evaluation.

Build Your Schedule Around the Session Structure

Chinese futures markets run a day session (roughly 9:00–11:30 and 13:30–15:00, with a short break around 10:15) and night sessions for many contracts (typically starting 21:00, ending at 23:00, 1:00, or 2:30 depending on the product). Your plan should assign roles to each window:

• 9:00–10:15: Highest energy, highest noise. Overnight sentiment and opening prints resolve here. Either trade your best opening-range setup with reduced size, or observe. Do not trade the first five minutes blind.
• 10:30–11:30: Often the cleanest technical window of the morning as the opening auction noise settles.
• 13:30–15:00: The afternoon session frequently sets the closing positioning. Good for trend continuation plays off the morning's range.
• Night session: Iron ore and other night-traded contracts absorb global sentiment (oil, currencies, offshore metals pricing). If you trade nights, halve your size — liquidity is thinner and moves can be sharper. Many evaluation traders simply skip nights, and honestly, that's a defensible plan.

One structural note: Chinese exchanges have daily price limits, so a contract can't move beyond its limit in a single session. This is a genuine risk-management feature — but it cuts both ways, because a limit-locked market can prevent you from exiting. Never size up on the assumption that the limit will "protect" you.

Make the 2% Daily Cap a System, Not a Ceiling

The daily loss cap is only useful if your internal rules trigger well before it. Build a three-stage circuit breaker:

• Stage 1 — Soft stop at -1%: After losing 1% on the day, cut size in half for all remaining trades. You're likely off your game or the market doesn't fit your setup today.
• Stage 2 — Hard stop at -1.5%: Done for the day. No exceptions, no "one more with better odds." You've preserved half your daily cap as a buffer against slippage and gap risk.
• Stage 3 — Daily profit lock: If you're up 1.5%+ on the day, reduce to minimum size or stop. Protecting a big green day matters more than squeezing one more trade — a reversal from +2% to -1.5% is a 3.5% psychological swing that wrecks decision quality for days.

Also define your weekly loss limit: for example, if the week nets -2.5%, cut size by half until you're back to breakeven for the week. The 5% max drawdown is measured on equity, and most eliminations come from clustering losses across a few days. Weekly throttling breaks the cluster.

Pacing the +29%: Think in Weeks, Not Trades

Here's the uncomfortable truth: +29% against a 5% drawdown means your plan needs a real expectancy edge. No sizing trick manufactures that. What sizing and pacing do is give your edge enough repetitions to express itself. A realistic framework:

• Target per week: roughly 1.5%–2.5% net. That gets you to +29% in about 12–16 weeks of disciplined execution — assuming normal performance, no heroic assumptions.
• Expect flat and red weeks. A system with a 50% win rate and 1:1.5 payoff will produce losing weeks. Your drawdown rules exist precisely so those weeks cost 1–2%, not 5%.
• Track expectancy weekly: average win × win rate minus average loss × loss rate. If expectancy turns negative for two consecutive weeks, halve size and review — don't quit, don't force. Diagnose: is it the market regime, or are you drifting from your rules?

Resist the temptation to "catch up" after a losing week by doubling risk. That's how a -2% week becomes a -5% account. The evaluation rewards consistency over speed — a trader who grinds out steady weekly gains with shallow drawdowns passes; a trader who swings for the fences usually donates their fee.

Putting It All Together: A Sample Trading Day

Here's what this looks like in practice on a 100,000 yuan evaluation account:

• Pre-session (8:30): Review overnight moves in related markets, mark key levels on rebar and iron ore, write down the two setups you'll take and the levels that invalidate them. No setups identified? You observe today. Flat is a position.
• 9:00–10:15: One rebar opening-range setup triggers. Stop is 20 ticks, two lots, 400 yuan risk (0.4%). It works — you take 30 ticks on half and trail the rest. +0.3%.
• 10:30–11:30: Iron ore gives a pullback entry to the morning trend. Stop 12 ticks, one lot, 600 yuan risk (0.6%). Stopped out. Day: -0.3%.
• 13:30–15:00: Rebar retests the morning high with momentum. Same sizing as the first trade. +0.7%. Day closes at +0.4%.
• Log everything: entry logic, screenshot, emotional state, rule adherence. The journal is where the +29% actually gets built — because the edge you refine in the evaluation is the edge you keep afterward.

Notice what didn't happen: no revenge trades, no size escalation, no night session because the plan said skip it. Four trades, controlled risk, small positive day. Do that sixty times and the target takes care of itself.

Final Word: Constraints Are the Curriculum

A +29% target with a 5% max drawdown and a 2% daily loss cap isn't designed to be beaten by aggression — it's designed to be beaten by process. The traders who pass evaluations are the ones who treat the constraints as the actual training program: sizing discipline, session structure, circuit breakers, and pacing. The profit target is just the scoreboard.

If you've built a plan along these lines, the smartest next step is stress-testing it against real market data before you commit serious capital. That's exactly what we built XS Select for — a China futures evaluation platform where you can run your system against real Chinese commodity futures data, with the same style of profit target and drawdown constraints discussed here, starting from $29. Whatever platform you use, though, the principle stands: prove the plan in a structured environment first, then scale it. The market will always be there next week. Your drawdown budget won't.