Available margin

Ronald Raygun has responded to this question but it's still not making sense to me . Why would an account trading $4000 @.02 lots use more margin than an account trading $2000 @.01 lots? Shouldn't they use the same? This forces you to keep opening more accounts to spread your money out so you can keep your lot size small. The problem with that is that brokers limit the number of accounts you can have. Thanks for any insight.

It also depends on your leverage, which I suspect is in play here.

For example: on a 500:1 leverage account, it costs me ~$200 to open 1 lot (I need $200 in that account).

In a 100:1 leverage account, it costs me ~$1,000 to open 1 lot.

Let's say the account is $1,000,000 and I wanted to open at 1% risk. 1% of 1 million is 10,000.

So at 500:1 leverage, I can open 50 lots (50 x 200 = 10,000)
at 100:1 leverage, I can open 10 lots

Margin is simply the part of the money you control that you own. Leverage is the money a broker loans you (interest free at that) to trade with. I keep all of the profits and all of the losses. The difference between Forex leverage, and the traditional form of leverage, is that Forex leverage only decreases my holding cost. That is to say, it costs me less money to open the same position with higher leverage that it does with lower leverage.

This is key: One pip at 500:1 leverage costs the same as one pip at 100:1 leverage.

That's why I like brokers with high leverage. I can use a relatively small portion of my account to control a large sum of money.

Hi Ronald,
I understand that leverage will effect margin usage but the example I'm using is two accounts with the same leverage- 400:1. I watched them trade side by side with my EA and the $4000 @.02 lots used more margin than the $2000 @.01 lots. ?????