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Encyclopedia of Finance pp 753–759Cite as

Online Trading

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Abstract

The proliferation of the Internet has led to the rapid growth of online brokerage. As the Internet now allows individual investors access to information previously available only to institutional investors, individual investors are profiting in the financial markets through online trading schemes. Rock-bottom fees charged by the online brokers and the changing attitude toward risk of the Internet-literate generation prompt the practitioners to question the validity of the traditional valuation models and statistics-based portfolio formulation strategies. These tactics also induce more dramatic changes in the financial markets. Online trading, however, does involve a high degree of risk, and can cause a profitable portfolio to sour in a matter of minutes. This chapter addresses the major challenges of trading stocks on the Internet, and recommends a decision support system for online traders to minimize the potential of risks.

Keywords

  • Day trading center
  • Decision support systems
  • Financial market
  • Institutional investors
  • Internet
  • Online trading
  • Portfolio formulation strategies
  • Risks management
  • Stock investment
  • Valuation models
  • Web-based brokers

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  • DOI: 10.1007/978-3-030-91231-4_21
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Author information

Authors and Affiliations

  1. University of Southern Mississippi, Hattiesburg, MS, USA

    Chang-Tseh Hsieh

Authors
  1. Chang-Tseh Hsieh
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Correspondence to Chang-Tseh Hsieh .

Editor information

Editors and Affiliations

  1. Department of Finance & Economics, Rutgers University, Piscataway, NJ, USA

    Cheng-Few Lee

  2. Center for PBBEF Research, Phoenix, AZ, USA

    Alice C. Lee

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Hsieh, CT. (2022). Online Trading. In: Lee, CF., Lee, A.C. (eds) Encyclopedia of Finance. Springer, Cham. https://doi.org/10.1007/978-3-030-91231-4_21

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