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A DSS Approach to Managing the Risks of Online Trading

Author

Listed:
  • 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)

  • Cheng-Few Lee

    (Department of Finance, Rutgers University, Piscataway, New Jersey, USA)

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.

Suggested Citation

  • Chang-Tseh Hsieh & Binshan Lin & Cheng-Few Lee, 2000. "A DSS Approach to Managing the Risks of Online Trading," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 413-427.
    • Handle: RePEc:wsi:rpbfmp:v:03:y:2000:i:03:n:s0219091500000170
    DOI: 10.1142/S0219091500000170
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    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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