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Benefits And Drawbacks Of Online Trading Versus Traditional Trading. Educational Factors In Online Trading

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  • Petric (Iancu) Ioana Ancuta

Abstract

In terms of marketing, online trading is a new distribution channel and trading platforms are products of Investment and Financial Services Companies. Internet shortens the connection between the investor and the products they wish to purchase (shares, futures, CFDs, government securities, bonds, etc.), and in some cases it no longer needs a security broker. Increasing use of the Internet and increasing competitiveness between Investment and Financial Services Companies do the latter, to seek new distribution channels to specific products. The purpose of this paper is to examine to what extent the investor education level affects the decision to move from traditional trading to online trading and the benefits and disadvantages of these types of transactions. To whom should the Investment and Financial Services Companies guide their marketing campaign to attract more investors for online platforms? The work presented is part of a larger project that will be part of author thesis, studying other factors that influence the decision to move from traditional to online trading: cost factor, time factor, psychological and social attributes of investors, yield portfolios and technological capacities of Investment and Financial Services Companies. Starting from the idea that with the increase of experience in stock investments the investors will want to make their own decisions, Investment and Financial Services Companies should provide new products. Compared to competitors, an Investment and Financial Services Company must innovate, and information technology currently offers the tools for innovation facilities. At the same time, the existence and development of the Internet has made the transaction without assistance or with minimal human intervention possible (Voss, 2000). The difference is in the knowledge about stock market, the speed the transaction orders arrive in the stock market, direct access to multiple markets, transaction costs and the level of interaction between the client and his stock broker. To analyze the extent to which the investor education level affects the decision to move from traditional to online trading trading, author started from the literature review, a questionnaire-based survey available on internet and personal experience. The study shows that investors will switch to online trading when they have a high level of knowledge in the stock market, higher education and knowledge of internet.

Suggested Citation

  • Petric (Iancu) Ioana Ancuta, 2015. "Benefits And Drawbacks Of Online Trading Versus Traditional Trading. Educational Factors In Online Trading," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 1253-1259, July.
    • Handle: RePEc:ora:journl:v:1:y:2015:i:1:p:1253-1259
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    References listed on IDEAS

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    3. Brad M. Barber & Terrance Odean, 2000. "Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors," Journal of Finance, American Finance Association, vol. 55(2), pages 773-806, April.
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    More about this item

    Keywords

    online-trading; traditional-trading; stock market; education;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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