What you are calling “base leverage” is simply the limit your broker places on your use of leverage. It has nothing to do with determining your position size in any given trade.
Position size is determined by (1) your account currency, (2) your account balance,
(3) the pair you want to trade, (4) the percentage risk you are willing to take on that trade,
and (5) your stop-loss. Those are the metrics requested by the Position Size Calculator.
In any trade, the amount of leverage which you actually use can be calculated this way:
Actual leverage used = position size ÷ account balance
If your position is 1 standard lot of USD/CAD (for example), and your demo account balance is $50,000, then you are using 2:1 ACTUAL LEVERAGE (because $100,000 ÷ $50,000 = 2).
Your broker limits your actual leverage to 1000:1. This limit is referred to as MAXIMUM ALLOWABLE LEVERAGE. It should be obvious to you that you will never use actual leverage which is even close to that limit.
So, why does your broker offer you the option of using such an extreme amount of leverage? Because, high maximum allowable leverage corresponds to low required margin, based on the equation –
Required margin = 1 ÷ maximum allowable leverage
– and low required margin is a good thing.
In the case of your demo account, 1000:1 leverage corresponds to one-tenth of 1% required margin, meaning that, on the USD/CAD trade in the example above, your $100,000 position would require initial margin of only $100.
Compare that to a similar trade placed with a broker in the U.S., where maximum allowable leverage is limited (by law) to 50:1. In that U.S. account, the USD/CAD trade in the example would require initial margin of $2,000 (because 50:1 leverage corresponds to 2% required margin). That would be $2,000 of your money, set aside as required margin, and not available for your use.
Having $2,000 of your $50,000 play-money account set aside might not seem like a burden. But, this brings us to an important point. Unless you intend to begin live trading with $50,000 of real money, your $50,000 demo account is going to teach you some very bad habits. Rather than playing around with a large sum of fictitious play-money, you should adjust the balance in your demo account to the real-world figure you actually intend to begin with.
If you intend to begin live trading (at some point in the future) with $1,000 of real money, then adjust your demo account balance to $1,000, and learn to choose position sizes which are compatible with that amount of working capital.
If you can’t make adjustments to the “balance” in your demo account, then pretend that the balance is $1,000 (or whatever sum represents your realistic future plan for live trading). Determine your position sizes in accordance with that realistic sum, and learn to manage an account of that size.
A $50,000 demo account will only teach you to be reckless. If you doubt that, just imagine how you would trade with a $1 million-dollar demo account.