A DSS Approach to Managing the Risks of Online Trading

Chang-Tseh Hsieh, Binshan Lin and Cheng Few Lee
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Chang-Tseh Hsieh: College of Business Administration, University of Southern Mississippi, Hattiesburg, Mississippi, USA
Binshan Lin: College of Business Administration, Louisiana State University, Shreveport, Louisiana, USA

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2000, vol. 03, issue 03, 413-427

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 only available 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 risk attitude 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 paper addresses the major challenges of trading stocks on the Internet, and recommends a decision support system for online traders to minimize the potential risks.

JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2000
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DOI: 10.1142/S0219091500000170

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