Trailing drawdown and the DAX: the worst pairing

The mechanism, in three lines

A funded account's trailing drawdown is a floor that follows the account's high: at every new peak of the balance (often measured on unrealised gains, not only realised), the floor rises by as much, and it never comes back down. A trader who makes EUR 800 unrealised then gives back EUR 600 before closing has not "made EUR 200": he raised his floor by EUR 800 and only banked 200. The pillar article on trailing drawdown gives the exact arithmetic; here, we look at why the DAX is the instrument on which that mechanism hurts most.