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The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. ... The main participants in this market are the larger international banks.

These rates are usually pegged to the U.S. dollar. Their central banks have enough money in their foreign currency reserves to control how much their currency is worth. To keep the exchange rate fixed, the central bank holds U.S. dollars. It also increases the supply of dollars, sending its value down.

On average, at a bank you lose 8 percent when you change dollars to euros or another foreign currency. When you use currency exchange booths such as Forex or Travelex at the airport, you lose around 15 percent. If you must change cash in Europe, the postal banks inside post offices usually have the best rate.

Calculator: 1) Decide how much Euro currency you want to convert. 2)Visit the Exchange Rates website to find out the exchange rate for the current day.  3)Multiply the number of Euro currency you have by the U.S. dollar currency rate. 4)Visit a local currency exchange or bank to exchange the Euros to U.S. dollars.

To calculate the percentage discrepancy, take the difference between the two exchange rates, and divide it by the market exchange rate: 1.12 - 1.0950 = 0.025/1.0950 = 0.023. Multiply by 100 to get the percentage markup: 0.023 x 100 = 2.23%. A markup will also be present if converting U.S. dollars to Canadian dollars.

Trading in the stock market or any other exchange for that matter is not devoid of risks. Risks are a part and parcel of any investment and FOREX market is no stranger to such risks.