I am having difficult time understanding the effect of leverage. Let me put up a scenario that puzzles me:
I have 2 trading accounts, one with leverage 1:200 and the other is 1:1000. Both accounts have 100 USD
I opened 1 position (buy/sell) on says USDCAD with 0.01 lot size for both of the account.
In the event that the trades went against me, what is the maximum number of pips can they withstand until they get margin call?
Pip value for 0.01 lot size is 0.1 USD. So I simply divide 100 USD/pip value = 100/0.1 = 1000 pips. So both accounts (1:200 and 1:1000) can withstand 1000 pips drop until they both get margin call?
I feel like something is off. My feeling is that 1:200 account should get margin call first.
I appreciate if anyone can shed some light to this newbie question. Thanks in advance.