Hi all, I have read so much about traders doing carry trading. I have read an article on carry trading saying if you buy $1,000,000 USD/JPY (US interest rates: 5.25%, Japan interest rates: 0.5%), when you only pay $10,000 because of the 1:100 leverage. After a year, you will collect the difference in interest on US and Japan of 4.75% of the 1,000,000 !!! Which works out to be a quite substantial amount!

Is that true? Or the interest you will be paid only based on the amount you actually paid, which is 10,000,........not 1,000,000.

Can anyone comment on this?