Currency Carry Trades Strategy

First of all i would like to define this important Strategy used in Currency Trading which is known as "Currency Carry Trades Strategy".  in this Strategy a Forex traders tries to get any currency no matter Dollar, Pound or Rupees on a lesser rate of interest and later on tries to sale it on a much higher rate of interest and this different of interest is known as the profit of Investor.  But it is important to know that this interest can be substantial depending on the different leverage money that has been used in it.

If we try to explain the Currency Carry Trades Strategy with help of an example here we are going to do so. For a example a Currency Broker gets 5000 Pakistani Rupees on lesser rate of interest from National Bank of Pakistan and then change those 5000 Rupee with Spain Euro 300.  The amount of interest Pakistani Bank has set on it is less while for changing he goes to such a Spanish Bank that has a much higher rate of interest than the Pakistani Bank. Now by changing this money with higher rate of interest he can earn money so this is Currency "Carry Trades Strategy".  Now we come to risk factor in this Strategy that is uncertainty of exchange rates. If the exchanged currency goes down then his Profit will convert into loss even though interest rate of both banks remains different.  This why that person can lose the money by leverage factor of 10% to any.