Hi all...this is a question that has been bugging me a lot lately and I need help figuring it out. I know the basic principle of forex follows all business laws if you want to make money. That is, buy low then sell high and vice versa. However, here is the problem that I am having.
Say I buy a 1 pound for 1.5 USD. Now say that the 1 pound can buy a sandwich for arguments sake. I hold on to my pound for about 1 week and now the pound is worth 2 USD. I sell the pound and in effect I have made .50 cents USD. However, that 1 pound can still only buy a sandwich, so in effect, the value of my money has not changed right? A pound is still a pound and the fact that I have made .50 has not changed the relative value of that sandwich.
Can someone help me with this?
Say I buy a 1 pound for 1.5 USD. Now say that the 1 pound can buy a sandwich for arguments sake. I hold on to my pound for about 1 week and now the pound is worth 2 USD. I sell the pound and in effect I have made .50 cents USD. However, that 1 pound can still only buy a sandwich, so in effect, the value of my money has not changed right? A pound is still a pound and the fact that I have made .50 has not changed the relative value of that sandwich.
Can someone help me with this?