Although the capital market in our region is relatively young and underdeveloped, its popularity has grown in recent years, and many citizens have become shareholders through public offerings or, prior to that, through company privatization. Despite this, there are many uncertainties that shareholders and investors face on a daily basis. Due to the rapid market growth that lasted until around mid-2007, many saw investing in stocks as a way to make easy and quick profits. However, this was followed by a sudden and severe downturn, which created a negative perception of the stock market, leading some to characterize stock investing as a gambling hazard. Of course, both of these views on the stock market are incorrect.

As it is known, stocks are primarily traded on stock exchanges, which facilitates the meeting of supply and demand, price formation, and simplifies the trading process without unnecessary paperwork that might be involved in other forms of trading, such as trading through classified ads. There are several exchanges in the region where stock trading takes place. You can follow trading on exchanges and the movement of certain indices live through the following links.

Stock Exchanges
•Zagreb Stock Exchange
•Ljubljana Stock Exchange
•Banja Luka Stock Exchange
•Sarajevo Stock Exchange
•Belgrade Stock Exchange
•Macedonian Stock Exchange

Trading on the Zagreb Stock Exchange takes place every working day from 10 am to 4 pm. Trading of securities (stocks and bonds) on the Zagreb Stock Exchange is conducted through an electronic trading system. Brokerage firms are connected to the Exchange’s headquarters through special telecommunications links, allowing them to enter buy or sell orders directly from their offices and conclude transactions with other brokers. Therefore, there is no physical location where securities trading takes place; it occurs through an electronic system. The Zagreb Stock Exchange consists of the Regulated Market and the Multilateral Trading Facility (MTF). Stocks listed on the Zagreb Stock Exchange can be purchased through member companies of the exchange, which are authorized brokerage firms.

The Central Depository and Clearing Company plays an important role in the functioning of the securities market. Since securities no longer exist in physical form, meaning there is no paper representing a share or bond, the securities of Croatian companies are deposited in electronic form with the Central Depository and Clearing Company. In addition to this function, the SKDD manages the settlement and clearing system for securities transactions concluded on the regulated market and the multilateral trading platform (MTF), as well as over-the-counter (OTC) transactions outside the regulated market and MTF. As shares are deposited with the SKDD, when an investor wants to, for example, donate or inherit shares, they turn to the SKDD to exercise their rights.

Stocks are traded on regulated markets (stock exchanges) through authorized intermediaries, namely brokerage firms. The first step when wanting to trade stocks is to select a brokerage firm. One of the most important criteria at the beginning might be the trading fees. Fees usually range from 0.3% to 1.0%, and the amount depends primarily on the method of placing orders. Orders can be placed by phone, email, or fax, which is more expensive (due to increased broker involvement, these fees are often close to 1.0%) and somewhat outdated. Many brokerage firms today offer electronic trading platforms where investors can independently place orders that are then exposed to the exchange through the system. After choosing and contacting a brokerage firm, the next step is signing a contract, and once you deposit funds into the custodial account of the brokerage firm (which is solely for client funds), you can start trading.

The basic parameters of an order to buy or sell stocks are as follows: price (at which we want to buy or sell), quantity (number of shares we want to buy or sell), and order duration (determining how long the order will be exposed or selecting the “until canceled” option, which means the order will remain exposed until canceled). On electronic trading platforms, investors can independently see buy and sell orders currently exposed on the exchange, allowing them to determine the order parameters more easily. For example, if you want to buy a specific stock immediately and see a sell order at, let’s say, 120 kuna, you would place an order at that price, and the transaction will be executed instantly. However, if you don’t mind buying the stock right away or consider the current best ask price of 120 kuna too high, you can place a buy order at a lower price, and it will be exposed on the exchange and “wait” until the stock reaches that price.

When investors sell stocks, most of them do not request a payout of funds. The funds remain in their brokerage custody account, and they can use those funds to place buy orders for stocks at any time. However, if an investor needs the funds, they can be withdrawn to their current account. To initiate a payout, you would need to contact your broker or submit a request through the electronic trading platform. It’s important to note that if you have just sold stocks and need immediate funds, the funds are typically paid out to the current account on the third day after the transaction execution.

A stock represents ownership in a particular company.

Liquidity refers to the ease with which an asset or security can be bought or sold without causing a significant impact on its price. In the context of financial markets, it involves the total volume or number of transactions, total financial turnover, bid-ask spread (the difference between the best bid price and the best ask price), and the speed of trading within a specific time period. Liquidity also depends on various macroeconomic and market financial indicators of the traded instrument.

A dividend is an additional income generated from owning shares in a company. Shareholders who own a portion of the company are entitled to receive dividends. The amount of dividends paid out is not predetermined and depends on the company’s profits. Shareholders have special rights on the day of dividend payment.

A broker is an intermediary between the market and the client. They earn commission fees from each transaction. They do not take on risk but provide guidance and advice to clients, whether they are losing or gaining.

A trader or dealer solely operates for their own account and does not earn commission fees. Instead, they profit from the difference between buying and selling prices.

CROSEC refers to the Croatian Securities Commission. Its responsibilities include regulating and overseeing the securities market in the Republic of Croatia.

A brokerage firm is a company that acts as an intermediary in the buying and selling of securities. Every brokerage firm is subject to the supervision of a securities commission that regulates the regulations according to the securities trading law in each country. Your funds in a brokerage firm are held in a separate account that is distinct from the brokerage firm’s bankruptcy estate. For each investor, there is a record of their transactions in the CDA (Central Depository Agency).

A fee paid to the broker for executing an order, which is the basis for a certain number of requested securities. Brokers, exchanges, and the CDA (Central Depository Agency) determine the commission on securities.

Statistical composites that measure changes in the economy or the financial market. An index can be a group of stocks included in a common category. Each index has its own small portfolio of stocks or other financial instruments. For example, the NASDAQ 100 represents the 100 largest companies in America and serves as a good indicator of the U.S. economy. Domestic indices in Croatia include VIN, CROBEX, and CROBIS.

A collection of securities held by an institution or private investor. Having a portfolio means diversifying capital across different assets, reducing the risk of financial loss.

An abbreviation of “Foreign Exchange,” which refers to the exchange of foreign currencies.

The first two letters indicate the country to which the currency belongs, while the third letter indicates the name of the currency recognized as the official currency of that country. Examples include HRK for Croatian kuna, USD for United States Dollar, and GBP for Great Britain Pounds.

The profit of a bank or any other intermediary between the purchase and sale price of a financial instrument.

The quotation of an exchange rate that represents the price of one currency expressed in another currency. For example, 1 € is worth 7.2 kn. There are two types of quotations: direct and indirect. Banks always quote spot rates, which include two rates: one for selling and one for buying.

The rate at which the bank or currency exchange buys foreign currency from you. It is always lower. The difference between the buying and selling rates is called the price difference or spread.

The rate at which the bank offers to sell foreign currency to you.

The sum of the buying and selling rates divided by two.

The price of a foreign currency is expressed in the domestic currency. For example, in Switzerland, it would mean that 1 USD is worth 1.25 CHF. A direct quotation in one country is an indirect quotation in another.

The price of the domestic currency is expressed in a foreign currency. Countries like Great Britain and Ireland use indirect quotation.

The increase in prices for goods and services. It represents a general rise in prices in the national economy, resulting from increased consumer demand compared to market supply. Currencies of countries with high inflation tend to weaken.

The percentage charged for borrowing money. It is usually expressed as an annual percentage. For example, if you borrowed 1000 kn from a bank and the annual interest rate is 10%, the bank would charge you 100 kn as interest. Interest rates apply to accounts, credit cards, bonds, and various loans.

Technical analysis is used to analyze the market using charts based on the price history of a financial instrument. Its purpose is to identify future price movements, trends, and cyclic patterns. Some indicators used in technical analysis include double bottoms, triple tops, flags, moving averages, Fibonacci sequence, Elliott Wave analysis, and more.

A market trend dominated by a downward movement. Bears in the market continuously seek lower values.

A market trend dominated by an upward movement. Bulls in the market continuously seek higher values.

A long-term security. Its maturity period is usually more than one year. Bonds have a predetermined payment term and interest rate. Unlike stocks, bonds offer lower returns but are considered safer securities with limited potential for capital growth.

Investment funds are institutional investors registered as companies that collect funds from the general public, typically individual investors, and invest them in long-term, and sometimes short-term, investments. They provide individual investors with portfolio diversification and risk avoidance, reduce transaction costs through bulk transactions, ensure liquidity, and offer professional management. The fund organizer charges a management fee for their services.

There are various types of funds, differing in organization, organizer fees, methods of buying or selling units, etc. Some funds invest in common stocks, some combine stocks and bonds in their portfolio, some focus on fixed income, and many are specialized (in specific industries, based on territorial principles, according to the size of invested companies, etc.).

DeFi stands for Decentralized Finance, which is a financial system based on blockchain technology that does not rely on a central control point (such as banks, brokerage firms, lenders, and other entities regulated by the government). This facilitates financial transactions.

DeFi is similar to our current financial system but is peer-to-peer and relies on decentralized currencies called cryptocurrencies and decentralized services called DApps (Decentralized Applications) to facilitate transactions.

There are no restrictions, and that’s why anyone can do it! If you have experience with decentralized technology, you can be at the forefront of shaping the future of DeFi.

DeFi Coin or DeFi token is a digital asset that can be bought, sold, and traded using decentralized solutions called DApps. DeFi coins are created by people for people, without government interference.

DeFi coins are issued on a blockchain in an open-source environment, using modular frameworks that are resistant to censorship. These tokens can be pegged to the U.S. dollar, fluctuate based on supply and demand like stocks, or automatically adjust according to price fluctuations, also known as “rebasing”.

You can use cryptocurrency to pay for things or send to friends. The transactions occur through the Bitcoin network, a decentralized network of independent nodes that verify each transaction.

DeFi applications (referred to as “DApps”) are financial instruments that allow you to buy, sell, and trade digital assets, similar to solutions we use today like PayPal or Robinhood, but only on a decentralized network. Since DApps operate on the blockchain, no one has control over the network.

Not all DApps allow buying, selling, and trading of cryptocurrencies. Some of them enable lending and borrowing of various crypto assets. If you explore some of the top Crypto tokens and DApps currently available, you will discover many different types of DApps for various use cases.

When cryptocurrency is created, its transaction history is stored in a public ledger that records ownership, making their records visible to everyone. However, the transaction is only tied to the user’s wallet, not their personal identity, giving people more discretion in managing and preserving their money.

With cryptocurrency, you don’t have to rely on banks or brokerage firms, making it easier to manage your own funds. Blockchain allows you to retain complete control over your assets using digital wallets. These digital wallets securely hold your funds, and access can only be obtained with a private key that only you have.

On the blockchain, you can send peer-to-peer transactions to anyone within the network from anywhere in the world, bypassing the approval of banks and other financial service intermediaries.

Cryptocurrency gives you greater control over your money and, in the minds of many, offers promising protection against inflation. We believe that the power of blockchain and cryptocurrency has only scratched the surface and there is much more available.