No, you are not missing anything and it's a great question. You're asking about the capital requirement or rather "starting" capital requirement.

One of my favorite movies is The Matrix. And, one of my favorite scenes is the one where Morpheus holds out his hands to Neo and offers a blue pill (pill of blissful ignorance) or a red pill (pill of knowledge)

Blue pill answer:

These trades are based on trading one NQ futures contract on a 36 range chart. I recommend a $50K account for NQ futures traded on a 36 range chart. In general, the more volatile the contract, the higher the starting capital requirement. Likewise, the greater the range or time period, the higher the starting capital requirement.

Red pill answer:

What you are really asking about is the calculation of drawdown, and this is a bit of a rabbit hole in the backtesting community. Most people (and rightly so) think drawdown is a calculation of the maximum loss and its relation to the account size. Ninjatrader calculates it as starting from 0 and assumes full reinvestment of the profit or loss on each trade.

This video does a good job of explaining how it's calculated for NinjaTrader: https://www.screencast.com/t/XkfarUWha7ST

Every platform has its own logic.

We use drawdown percentage, along with the percentage of profitable trades, to gauge risk for our strategies. We've defined the holy grail of automated trade strategy as having less than 5% annual drawdown and greater than 80% profitable trades.

Hope that helps.