Understanding Online Traders' Behavior: An Example from Common Stock Investment in Taiwan

The effect of online trading on investors' trading behavior is analyzed based on investors' trading data provided by a major security firm in Taiwan. Findings are as follows: (1) Male and younger traders preferred online trading. Investors who had a higher gross return tended to switch to using online trading. (2) Even though investors traded more actively after going online, their trading performance was not negatively affected. (3) Online trading did not significantly increase speculative trading even though more information can be assessed online. (4) The order execution efficiency of online trading was better than that of phone-based trading.