Must-Know for Small Investors | Complete Guide to Fractional Share Investing: Master Trading Timing and Fee Calculation Tips

For many salaried workers with limited funds, the investment threshold of several thousand yuan for whole shares is hardly accessible. But did you know? There is actually a more flexible stock trading method that allows you to start investing in popular companies with just a thousand-yuan level of capital. This is the odd-lot trading that has surged in popularity in recent years.

What is odd-lot trading? Why did it appear?

The standard unit of stock trading is one lot (1000 shares), but in practice, investors often hold scattered stocks due to unfilled orders, and these stocks under 1000 shares are called “odd lots,” with a minimum trading unit of just 1 share. Odd-lot trading usually arises from the following situations: rapid stock price fluctuations causing orders to be only partially filled, transactions exceeding the order price limit before reaching the target quantity, or the issuance of small fractional shares during rights offerings.

After the Taiwan Stock Exchange opened intraday odd-lot trading on October 26, 2020, investment opportunities for small investors greatly increased. Now, investors can not only trade odd lots after hours but also participate during regular trading hours, greatly enhancing trading convenience and success rates.

Odd-lot trading hours: seize two golden periods

Intraday odd-lot trading (9:00-13:30)

The intraday trading period overlaps completely with regular stock trading hours. Investors can start submitting odd-lot orders via their broker’s trading platform from 9:00 AM. The system will perform the first matching at 9:10, followed by continuous matching every minute through a call auction, following the principles of “price priority, then submission time.” Note that during trading hours, orders can only be placed electronically; manual orders are not accepted.

If your order is unfilled or partially filled during the day (for example, if your ask price is too high), the unfilled portion will not automatically carry over to after-hours trading. You need to resubmit a new order during the after-hours period.

After-hours odd-lot trading (13:40-14:30)

The after-hours period offers more flexibility. Investors can place orders via electronic trading or by calling broker customer service for manual orders. The exchange conducts a single call auction at 14:30. Unfilled orders are automatically canceled immediately afterward and will not carry over to the next trading day.

How are odd-lot transaction fees calculated? Make sure to have sufficient funds

The odd-lot transaction fee is calculated the same way as for whole shares, at 0.1425% of the transaction amount. For example, buying 200 shares of TSMC (2330.TW, assuming a closing price of 1065 yuan):

Fee calculation: 200 shares × 1065 yuan × 0.1425% = 303.53 yuan

If your broker offers a 50% discount for electronic orders, the actual fee paid would be: 303.53 yuan × 50% = 151.77 yuan

Different brokers have varying fee policies. Here are some major broker discounts for reference:

It is recommended to invest at least NT$10,000 or more to effectively spread out the transaction costs. Small investment amounts will see high transaction fee proportions, significantly eroding profits.

Is odd-lot easy to sell? Three trading tips to break through the difficulty

Although trading convenience has greatly improved, the trading volume of non-hot stocks remains relatively low, and you may face the dilemma of “placing an order for half a day without a fill.” For example, with Xinjing (1582.TW), due to low trading activity, it’s quite difficult to quickly sell 700 shares of odd lots during the day.

Tip 1: Convert odd lots into whole lots to accelerate transactions

When you find it hard to sell odd lots, adopt the “convert odd to whole” strategy. Suppose you hold 700 shares of Xinjing; you can buy an additional 300 shares to make a full 1000-share lot, then sell the whole lot in a more active stock market. This not only increases the chance of successful transaction but also avoids wasting multiple order fees.

Tip 2: Place extreme price orders after hours to increase success rate

Since after-hours trading only involves one call auction at 14:30, if you want to buy quickly, set your order at the “limit-up” price; if selling, set at the “limit-down” price. According to the maximum transaction principle, doing so can significantly improve the likelihood of your order being filled.

Tip 3: Use time differences to diversify risk

If your order isn’t filled during the day, place another order after hours; if still unfilled, continue to place orders during the next trading day. Spreading out order times increases the chances of matching with buyers at different times.

The true face of odd-lot investing: advantages and disadvantages coexist

Positive features

The biggest attraction of odd-lot trading is significantly lowering the investment amount threshold. With just NT$1000, you can start investing in high-priced stocks like TSMC, allowing small investors to participate in the market. Additionally, odd-lot trading is very suitable for dollar-cost averaging strategies—you can regularly invest small amounts each month to “test the waters” in the stock market without a large upfront investment. This helps beginners accumulate practical experience while maintaining liquidity for daily life.

Negative features

First, liquidity is relatively poor. Odd-lot buy/sell orders are limited, and transactions often take a long time, especially when trying to sell quickly. Second, transaction costs are higher for odd lots. Although the fee rate is the same as for whole shares, the minimum fee (usually NT$20) means the cost proportion is higher for small investments. Third, trading is limited. You can only place sell orders for odd lots; buying orders are not allowed, and all holdings must be sold at once. Operations like converting odd lots into whole shares are also time-restricted and may expire. Lastly, due to the scarcity of odd-lot sources, even if you are eager to buy, brokers may not have enough inventory to meet your demand.

Cost awareness makes small investors twice as effective

Rather than being entangled by odd-lot transaction fees, start from the source—ensure each investment is sufficiently large, at least NT$10,000; choose brokers offering discounts; and make good use of electronic orders to get discounts. Only then can odd-lot transaction fees not become a barrier to asset growth, allowing you to truly enjoy the convenience of small-scale investing.

Remember, the core advantages of odd-lot trading are “low threshold, high flexibility.” By making full use of these two points, you can steadily move toward financial freedom even with limited funds.