← Back to Blog · 2026-10-26 · 8 min read · Challenge Guide

It is 2:14 PM in Shanghai. The lunch break just ended. You are looking at the rebar (RB) chart on the Shanghai Futures Exchange (SHFE). The price is chopping, but you see a breakout setup forming. Your account size for this evaluation is $10,000. Your maximum drawdown limit is $500 (5%). You have a 10x bonus multiplier on your performance, which is tempting, but it does not change the hard math of risk management.

Here is the pain point that kills 90% of traders in futures evaluations: they treat the 10x bonus as a license to increase leverage. They think, "If I make 1%, I get 10%, so I can risk more to hit the target faster." This is a fatal error. In a prop firm-style evaluation, specifically for Chinese commodity futures, the drawdown limit is not a suggestion—it is the wall. If you hit that wall, the account is gone, regardless of how profitable your strategy might have been long-term.

Designing a trading plan for a 10x bonus challenge on China futures requires a shift in mindset. You are not trying to maximize returns; you are trying to maximize survival while capturing trend moves. This article breaks down exactly how to structure your risk parameters, position sizes, and asset selection to navigate Chinese markets without blowing your 5% drawdown cap.

Understanding the Math: Why 5% is Tighter Than It Sounds

In traditional retail trading, a 5% monthly drawdown might feel manageable. In a prop firm evaluation, especially one focused on China futures, it is incredibly tight because of the leverage inherent in futures contracts. Unlike stocks, where you might buy a few shares of a company, futures are leveraged instruments. One move against you can wipe out your equity buffer in minutes.

Let’s look at the reality of the SHFE. Take Rebar (RB) as our primary example. It is one of the most liquid Chinese commodity futures, heavily traded by institutional players and retail speculators alike. The tick size is 1 CNY per ton, and the contract multiplier is 10 tons per lot. This means one tick is worth 10 CNY.

If you are trading with a $10,000 account (converted roughly to CNY based on current exchange rates, though most platforms handle this in USD margin), let’s assume a simplified dollar-based risk model for clarity. If your max drawdown is $500, you have very little room for error. If you risk 1% of your account ($100) per trade, you can only afford five full losses before you are at the edge of the cliff. Most traders fail because they risk 2-3% per trade, thinking they have a high win rate. In a volatile market like iron ore, a single gap or slippage event can turn a "small" loss into a catastrophic one.

The Impact of Leverage on Drawdown

Chinese exchanges often have higher margin requirements than Western counterparts, but the leverage is still significant. When you hold a position in Iron Ore (I) or Coking Coal (JM), you are exposed to the full notional value of the contract. If the market moves 1% against you, your equity might drop by 5-10% depending on the margin ratio. With a 5% total drawdown limit, a single bad day can be your last day.

Your trading plan must prioritize capital preservation over aggressive accumulation. The 10x bonus is a reward for passing, not a tool for gambling. If you pass with a 2% gain, you still get the bonus. If you blow up chasing a 20% gain, you get nothing. The asymmetry of outcomes demands a conservative approach.

Asset Selection: Liquidity and Volatility Profiles

Not all Chinese commodity futures are created equal. To survive a 5% drawdown limit, you must choose instruments that offer sufficient liquidity to enter and exit without massive slippage, but also exhibit predictable volatility patterns. Avoid exotic or illiquid contracts.

Here is a breakdown of the "Big Three" for retail traders in China futures evaluations:

• Rebar (RB): Extremely liquid. Driven by construction demand, real estate policy, and steel mill output. Volatility is moderate. Good for technical trading due to high volume and tight spreads.
• Iron Ore (I): Also on the Dalian Commodity Exchange (DCE). Highly correlated with global steel demand. Can be more volatile than Rebar due to international news flow (e.g., Australian mining news, Chinese stimulus announcements). Requires wider stops.
• Crude Oil (SC): Traded on the Shanghai International Energy Exchange (INE). Follows global Brent/WTI trends. High volatility. Only trade this if you have a very precise entry. One bad news event can gap the price, blowing through stops.

For a conservative plan targeting the 10x bonus, Rebar (RB) is often the best starting point. Its intraday moves are often range-bound until a clear trend emerges, allowing for tighter stop-loss placement compared to Iron Ore. Remember, a tighter stop means you can risk less absolute capital per trade while maintaining a favorable risk-to-reward ratio.

Position Sizing: The 0.5% Rule

This is the core of your trading plan. Forget the "risk 1-2%" advice you hear in general trading courses. For a China futures evaluation with a 5% drawdown limit, you should aim to risk 0.25% to 0.5% per trade.

Why so low? Because futures slippage is real. If you place a stop-loss at 3,600 CNY per ton for Rebar, and the market gaps down to 3,580 CNY, your actual loss is double what you planned. By planning for 0.5% risk, you leave a buffer for slippage and commissions. If you plan for 1%, slippage puts you at 1.5-2%, and two bad trades leave you with only 1% of your drawdown limit remaining.

Calculating Contract Size for Rebar

Let’s run a concrete example. Assume your account is $10,000. Your max drawdown is $500. You want to risk 0.5% ($50) on a Rebar trade.

1. Identify Entry and Stop: You see a breakout at 3,650 CNY. Your stop-loss is below support at 3,620 CNY. The risk distance is 30 CNY per ton.
2. Calculate Value per Lot: 1 Lot of Rebar = 10 tons. 30 CNY risk/ton * 10 tons = 300 CNY risk per lot.
3. Convert to USD: Assuming an exchange rate of roughly 7.2 CNY/USD, 300 CNY is approximately $41.66.
4. Position Size: If you risk $50, you can trade 1 lot. If the stop distance was wider (e.g., 50 CNY), the risk per lot would be ~$69, which exceeds your $50 limit. In that case, you cannot take the trade with 1 lot. You must wait for a tighter setup or skip the trade entirely.

This logic is non-negotiable. If the required position size to meet your risk parameter is less than 1 lot, you do not trade. There is no such thing as 0.5 lots on SHFE. This forces you to be selective, which is exactly what the evaluation wants to see.

Execution Strategy: Intraday vs. Swing

With a hard drawdown limit, holding positions overnight is dangerous. Chinese markets can gap significantly at the open due to overnight news, particularly for commodities like Iron Ore which are influenced by international markets. A 5% overnight gap could instantly breach your drawdown limit before you even have a chance to react.

Therefore, your trading plan should be predominantly intraday. Close all positions before the market close or before the lunch break if you are not in a strong trend. This eliminates overnight gap risk.

The "Two-Strike" Daily Rule

Implement a strict daily loss limit. If you lose 2% of your account in a single day (which is 40% of your total drawdown allowance), stop trading for the day. Walk away. This prevents "revenge trading," a psychological trap that kills prop firm accounts. In China futures, momentum can be fierce. If you are on the wrong side of a trend in Rebar, trying to average down or double up to recover losses will lead to a margin call and evaluation failure.

Instead, focus on quality setups. Look for:

• Breakouts with Volume: Confirm moves with increased trading volume on the SHFE.
• Mean Reversion in Ranges: During low-volatility periods, fade extremes with tight stops.
• Trend Continuation: Use moving averages (like the 20 EMA) to identify pullbacks in established trends.

Managing the 10x Bonus Psychology

The 10x bonus is a psychological hazard. It creates a "lottery ticket" mentality. Traders often think, "I only need a few big wins to pass." This leads to over-leveraging. Remember, the bonus is applied to your profit, not your trading capital. You still need to generate actual profit from your $10,000 base. The bonus just amplifies the payout once you pass.

Treat the evaluation as if you were trading with real money where you cannot deposit more if you lose. This mindset shift is crucial. Every trade should be evaluated on its process, not its outcome. Did you follow your 0.5% risk rule? Did you stick to liquid instruments? If yes, even a losing trade is a successful execution of your plan.

Practical Application: A Sample Trading Day

Let’s walk through a hypothetical day trading Rebar (RB) in a China futures evaluation.

Scenario: 9:00 AM, market opens. You are watching the 5-minute chart. RB is consolidating in a tight range between 3,640 and 3,660. You are flat.

Action: At 10:30 AM, volume spikes. Price breaks above 3,660 with strong momentum. Your system signals a long entry at 3,665. You place a stop-loss at 3,655 (10 CNY risk per ton).

Calculation: Risk per lot = 10 CNY * 10 tons = 100 CNY. In USD, this is roughly $14. Your risk limit per trade is 0.5% of $10,000 = $50. Since $14 < $50, you are well within limits. You buy 2 lots. Total risk = $28. This is 0.28% of your account. Very safe.

Outcome A (Win): Price rises to 3,680. You take partial profits at 3,675 and move your stop to breakeven. Price hits 3,690. You close out. Profit: 25 CNY per ton * 20 tons = 500 CNY (~$69). This is a 0.69% gain on your account. Small, but it adds up.

Outcome B (Loss): The breakout fails. Price drops to 3,655. Your stop is hit. Loss: $28. This is 0.28% of your account. You take 1-2 more losses like this, and you are still at 99% equity. You are nowhere near the 5% drawdown limit.

This is the power of small risks. You can survive a string of losses and still be in the game. Traders who risk 2% per trade would have been down 6% after three losses and failed the evaluation.

Conclusion: Consistency Over Heroics

Passing a 10x bonus challenge in Chinese commodity futures is not about finding the "perfect" trade. It is about boring, consistent execution of strict risk management rules. The market is noisy, and China’s regulatory environment can shift sentiment quickly, especially in sectors like real estate (impacting Rebar) or energy. Your edge is not prediction; it is survival.

Keep your position sizes small. Stick to highly liquid contracts like Rebar and Iron Ore. Avoid overnight holds. Respect the 5% drawdown limit as a physical boundary, not a financial one. If you can master the discipline of risking only 0.5% per trade, you will find that the 10x bonus becomes a realistic goal rather than a distant dream.

If you want to test this disciplined approach without risking personal capital, consider practicing your strategy in a live environment. You can test your system on a real-data China futures evaluation at XS Select, starting from just $29. It is a low-cost way to prove to yourself that your plan can survive the volatility of the SHFE and DCE.