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- W213570312 abstract "INTRODUCTION Online trading is a practice that has exploded in growth and popularity. Currently, there are approximately 150 brokerage firms offering online trading (Future Banker, 2000). Societies use of the Internet has changed the entire concept of securities trading. In fact, Minkoff (2000) termed society=s use of online trading as mainstream. In further support of this notion, he went on to add that by the year 2005, it is predicted that 81 percent of the households that own stocks will have an online account. Currently, 25 percent of the households that own stocks have an online account. Another study estimated that by the year 2003 approximately 9.7 million American households will manage more than $3 trillion in assets spread among some 20.4 million online accounts (Drummer, 1999). These are mind-boggling statistics compared to just three years ago when electronic trading was regarded a fad (Carroll, Lux, and Schack, 2000). Presently, in the U.S. one out of every six stock trades occurs over the Internet (Kassenaar, 1999). In 1999 online brokerage firms raised $1.76 billion in capital markets due to approximately five million online investors (Economist, 1999, and Registered Representative, 1999). Despite all of its growth and popularity, online investing possesses a host of problems and challenges for everyone involved. You can make money fast and lose it faster, concluded Drummer's (1999, p.1). LITERATURE REVIEW There are several studies in the literature that attempt to discuss some of the problems and challenges associated with online trading. The first problem discussed in the literature is hidden costs and deceptive advertising associated with online trading. Atkinson (2000) supported this contention that buried in all the online trading hype resides the fine print. This obscure data translates into a venture that is more costly than one was lead to believe. Another topic of discussion was that of the independence one comes to face when it comes to online trading. The fact that one must solely bear the overwhelming duties of research and investment decisions was supported through the studies conducted by Opdyke (2000) and Brackey (2000). Reliability was yet another area of concern discussed in these studies. The studies conducted by Patel (1999) and Opdyke (2000) confirmed that factors such as Internet congestion and erroneous data sites could prove costly to investors. Delayed and varied execution speeds and self serving market makers were among the items responsible for this pitfall of online trading as was collaborated in the studies by McNamee (2000) and Patel (1999). Internet security is also a major concern to investors. Computer hackers and viruses plague every sector of the computer community and with certainty will continue to do so. Finally, the long-term ill effect of online trading in regards to earnings was also discussed in the literature. McMillan's (1999) study found investors who outperformed the market by three percentage points before they began online trading, typically lag it by two points afterwards. PROBLEMS AND CHALLENGES Internet applications are endless and e-commerce companies are developing innovative business models and making advancements everyday. One of the fastest growing internet ventures is online trading. The first internet securities trading occurred in 1994. By 1997, it has been estimated that 17 percent of all trades occurred online via the internet (Goldberg, 1998). Online brokerage firms emerged and the wealth of information available to many investors have promoted the practice of investing through the internet. The opportunity that online investing present to investors is intriguing and returns often seem very promising. Within these opportunities lie many problems and challenges that are potential obstacles for the online investor. There are a variety of issues that online investors will face today and continue to do so in the future. …" @default.
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- W213570312 date "2000-07-01" @default.
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- W213570312 title "Online Trading: Problems and Challenges" @default.
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