Must-know for small investors! How to buy fractional shares without losing out? Trading hours, fees, and tips all in one guide

Many investors new to the stock market have a common concern: Why do I have to wait until I own 1000 shares before I can buy? The answer lies in fractional share trading. Fractional share buying and selling has become a new option for small investors in Taiwan. Today, we will analyze how to buy fractional shares, trading rules, cost calculations, and practical tips.

What are fractional shares? Why did they appear?

The basic unit of stock trading is a “lot,” which is 1000 shares. However, in actual operation, investors often hold scattered stocks less than 1000 shares, called “fractional shares,” with a minimum unit of 1 share.

The emergence of fractional shares is mainly due to several reasons:

• Incomplete order execution: The set price and transaction price differ, causing some orders to not be fully filled
• Rapid stock price fluctuations: Prices move too quickly, leading to automatic cancellations or partial fills
• Dividend and stock distribution processes: When companies distribute shares, leftover fractional shares may occur

In simple terms, fractional shares are “stock leftovers” transactions, with each order not exceeding 999 shares.

How to buy and sell fractional shares? Complete trading schedule

October 26, 2020, was a turning point—the Taiwan Stock Exchange opened intraday fractional share trading, breaking the previous restriction of only after-hours trading. Now, investors have more time windows to operate.

Features of intraday trading:

• Overlaps with regular stock trading hours; orders can be submitted from 9:00 AM
• Only through broker apps’ electronic orders
• Unfilled orders do not automatically carry over to after-hours; need to re-submit

Features of after-hours trading:

• Orders accepted from 1:40 PM to 2:30 PM
• Supports electronic, phone, manual orders
• One matching at 2:30 PM, unfilled orders are automatically canceled

How to buy fractional shares? Account opening process and fee analysis

Account opening and order placement process

Purchasing fractional shares is the same as buying full shares—done directly through a broker. Simply select “Fractional Share Trading Mode” in the broker app’s trading page, and switch the purchase amount from “lots” to “1-999 shares.”

How are fees calculated?

Fractional share fees are the same as full shares, calculated as transaction amount × 0.1425%, but each broker sets minimum fee thresholds and discounts for electronic orders.

Example: Buying 200 shares of TSMC (stock price 1065 NT$)

• Basic fee: 200 × 1065 × 0.1425% = NT$303.53
• With a 50% discount from the broker: NT$303.53 × 50% = NT$151.77

Comparison of main brokers’ fractional share fees

Tip: Buying fractional shares over NT$10,000 is more cost-effective, helping to spread out the fixed costs.

How to make fractional shares easier to sell? Practical trading tips

Not all stocks’ fractional shares are easy to sell. Less popular stocks have lower trading volume, sometimes making it impossible to execute trades all day. In such cases, proactive measures are needed.

Tip 1: “Convert fractional to whole” to accelerate execution

Suppose you want to sell 700 shares of a less popular stock, but no one is interested during the day. The solution is:

• Buy an additional 300 shares to make a total of 1000 shares (1 lot)
• Convert to whole shares for trading
• Whole shares have much higher liquidity than fractional shares, leading to faster execution

Tip 2: Use the “maximum transaction principle” in after-hours batch auction

After-hours trading involves only one matching, following the maximum transaction principle. Therefore:

• When eager to buy: place an order at the limit up price (price ceiling), maximizing chances of execution
• When eager to sell: place an order at the limit down price (price floor), increasing the likelihood of execution

Tip 3: Understand trading rule limitations

• Fractional shares can only be sold, not bought (buy orders can only be market orders or set at specific prices)
• Must sell all at once; cannot sell in parts
• Converting fractional to whole shares has time limits

Pros and cons of buying and selling fractional shares

) Advantages

1### Significantly lower capital threshold

Compared to the minimum of 1000 shares for full lots, fractional shares allow investors with limited funds to participate. You can buy a desired stock with NT$1000, suitable for regular savings plans, while keeping sufficient liquidity for daily expenses.

2) Lower risk for “testing waters”

New investors can familiarize themselves with stock market operations through small amounts of fractional shares, without large initial investments.

3) Enjoy shareholder rights

Fractional shareholders are entitled to dividends and bonuses. Even less than one share can be converted into cash dividends.

) Disadvantages to note

1### Poor liquidity

Trading volume is much lower than full lots, often leading to longer matching times, especially for less popular stocks.

2) Higher transaction costs

• Has minimum fees (usually NT$20 or more)
• When trading small amounts, the fee ratio is higher
• May involve additional service charges, making overall costs higher than full shares

3) Operational limitations

• Can only sell, not buy (no buy orders)
• Limited to one-time sale
• Converting fractional to whole shares has a time limit; expires if not completed

4) Inventory risk

If the broker’s inventory of fractional shares is insufficient, investors may not be able to buy the desired quantity.

Other small-investment options besides fractional shares

If concerned about high fees and liquidity issues with fractional shares, other options are available.

Contracts for Difference (CFD) is a recent alternative. Investors do not hold actual stocks but trade price differences. With a 5% margin, only a small portion of the total amount is needed to operate, lowering the entry barrier. For example, in Google stock:

• Actual purchase: 400 USD × 5 shares = 2000 USD
• CFD purchase: only 100 USD margin required

But note: fractional shares are suitable for long-term holding; CFDs are more for short-term trading, settled daily, with overnight positions incurring interest costs.

Conclusion

Fractional share trading has become an important part of Taiwan’s investment market. Compared to traditional full lots, buying fractional shares lowers the entry barrier and better suits small investors’ financial planning. Through flexible intraday and after-hours trading, investors have more opportunities to participate.

However, successful fractional share investors understand that: knowing trading rules, controlling transaction costs, choosing the right timing, and assessing liquidity risks are all essential. Based on your capital, risk tolerance, and investment horizon, selecting appropriate strategies will allow fractional share investing to truly serve asset growth.