Leverage does not increase your risk. It increases your position.
This distinction is the whole lesson, and almost every explanation of leverage gets it backwards.
Leverage lets you control a position larger than your account balance. At 1:100, $1,000 controls $100,000 of currency. At 1:500, it controls $500,000.
Margin is the portion of your balance the broker sets aside as collateral while the position is open. At 1:100, a standard lot ($100,000) requires $1,000 of margin.
`` Margin required = Position size ÷ Leverage ``
Neither of those numbers is your risk.
What actually determines your risk
Your risk is stop distance × position size. That is it.
Two traders, both with $1,000:
| Trader A | Trader B | |
|---|---|---|
| Leverage | 1:500 | 1:30 |
| Position | 0.02 lots | 0.02 lots |