Stop loss level dependant on risk level?

Hi guys, total newcomer here, and I have a question on stop loss.


Ok, so say I have a $10K account and and want to risk 2% on a trade, so $200.

I decide a 100 pip S/L is correct for this particular trade so that means I need 2 mini lots to get the correct position size.

Risk Amount = Stop loss in pips No. of lots
200 = 100 x 2

Position size = 20,000
Leverage = Position size/Account size = 20,000/10,000 = 2:1


So far so good.....

But say I thought 40 pips was a better place to put my S/L for this trade. Now we have

200 = 40 x 5 or another example
200 = 10 x 20

And I'm looking at 5:1 (or 20:1) leverage which is unacceptable. My question is "Is your S/L completely dependant on your risk size?" because it certainly seem like it is. But doesn't that severly limit your trading options as you are stuck only trading relatively large pips to keep your leverage low?

Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined primarily by the maximum dollar amount you are willing to lose.—Bruce Kovner

You then can adjust your trading parameters so that the point in question meets your risk tolerance.

The "use ultra low leverage" advice is for those who max out their 100:1 accounts on every trade. When your calculating your position sizes in the way you describe, there is absolutly nothing wrong with using >5:1 or even >30:1 (if your scalping for example). Just be sure to keep your total risk for the trade equal to your 2% figure.