Leverage has a significant impact on the risk of a stop-out in two main ways:
It affects the initial margin requirement: Higher leverage allows you to open a position with a smaller upfront margin. While this can be attractive, it also means your position is more sensitive to price changes.
It increases the volatility of your position: With higher leverage, even small market movements can cause larger fluctuations in your account equity. If the market moves against your position and your equity falls below the required maintenance margin, a stop-out will occur, and your position will be automatically closed to limit losses.
In simple terms, higher leverage increases the risk of a stop-out because it requires less margin to open a trade, making your position more vulnerable to small price changes. On the other hand, lower leverage requires a larger initial margin, making your position less likely to be closed out by a stop-out, as it would take a more significant price movement to trigger it.