How To Trade the Carry Trade Strategy - Part 1

This video is Part 1 of a series explaining what the currency carry trade is.  Basically, it is taking advantages of interest rate differences between countries.  When traders hold currency pairs after 5pm EST, they can either earn interest or pay interest depending on whether or not the currency that they are long on has a higher interest rate or a lower interest rate.  When the long currency has a higher interest rate than the short currency of the pair, interest is earned.  Conversely, when the long currency has a lower interest rate than the short currency, interest is owed. 

Using the FXCM platform, the speaker illustrates how to read the quote screen and understand how much interest would be earned or paid depending on whether or not you went long or short the currency pair.  When the trader is long the currency with the higher interest rate, it is said that they have the "wind at their backs".  Conversely, if they are paying interest every day, the "wind is in their face".