Say a currency pair is at parity 1 dollar to 1 dollar. I have $1,000 account and decided to trade it all long. Assuming no fees etc, I have 1,000 units and then that currency goes to 3:1. I now have 3,000 dollars so I sell and make $2,000 or a 200% return.
Now say I short the currency still at 3:1 with $1,000. I get 333 units and then it drops back to 1. I buy back my 333 units for 1 dollar and make $667 profit or a return of 66.7%.
The absolute change of the currency is the same on both sides but one side I made 200% and the other only 66%. Is this correct or am I having a brain fart?
Now say I short the currency still at 3:1 with $1,000. I get 333 units and then it drops back to 1. I buy back my 333 units for 1 dollar and make $667 profit or a return of 66.7%.
The absolute change of the currency is the same on both sides but one side I made 200% and the other only 66%. Is this correct or am I having a brain fart?