Unveiling How Much a Stock Costs: A Complete Guide to the Differences Between US and Taiwan Trading

Many novice investors encounter the same confusion when entering the stock market—why does buying one lot of Taiwanese stocks cost hundreds of thousands of NT dollars, while in the US stock market it only takes a few thousand? The secret behind this lies in the setting of trading units. To understand how much one lot of stocks costs, you first need to understand the trading rules of different markets.

Trading Units Decide Everything

The fundamental difference between Taiwanese stocks and US stocks is in the definition of trading units. In the US stock market, “one share” is the trading unit, and investors can buy or sell any number of shares, even just one share. But in Taiwan, one lot is the basic trading unit, and 1 lot equals 1000 shares.

This seemingly simple difference has a huge impact on investment costs. The same company listed in both markets may have a price difference of thousands of times.

How Is the Stock Price Determined?

Before calculating how much one lot of stocks costs, it’s essential to understand the nature of stock prices. The stock price represents the transaction price of one share, which fluctuates in real-time based on the latest trades between buyers and sellers.

Stock face value and stock price are often confused. Face value is the recorded value when the company issues shares (often NT$10 in Taiwan), while the stock price is determined by the company’s profitability and market expectations. A company’s stock face value might be NT$10, but its stock price could rise to hundreds of NT dollars.

For example, TSMC’s stock price is as high as NT$561; Tesla’s stock in August 2023 was priced at $254.11 per share. These prices are constantly changing, depending on market supply and demand.

How Much Does One Lot of Stock Cost?

The calculation is simple: stock price per share × 1000 shares = total cost of one lot

Taking TSMC as an example, if the current stock price is NT$561, then buying one lot of TSMC costs: NT$561 × 1000 = NT$561,000

This means that an ordinary retail investor needs at least NT$560,000 to buy one lot of TSMC. For most investors, this capital requirement is quite high.

Fractional Share Trading Changes the Game

Because the barrier to trading a full lot is so high, Taiwan’s stock market introduced fractional share trading. Fractional shares refer to trading less than 1000 shares (from 1 to 999 shares). Through fractional trading, investors can enter the market at a much lower cost than buying a full lot.

For example, if you want to invest in TSMC but only have NT$50,000, fractional trading allows you to buy approximately 89 shares (NT$50,000 ÷ NT$561), without having to gather NT$560,000 to buy a full lot.

However, there are clear differences between full lot and fractional share trading:

• Full lot trading uses continuous matching during market hours, offering high liquidity but requiring a high capital threshold, with the minimum unit being 1 lot.
• Fractional share trading uses a periodic auction every minute, with lower capital requirements but less liquidity, and the minimum unit is 1 share. Additionally, full lot trading occurs during market hours from 9:00-13:30 and after-hours from 14:00-14:30, while fractional trading is available during market hours 9:00-13:30 and after-hours from 13:40-14:30.

Why Do US Stocks Seem Cheaper?

Many people feel US stocks are cheaper, not because US companies are more affordable, but because of the visual difference caused by trading units.

For example, TSMC listed in both markets: in Taiwan, stock code 2330, price NT$561; in the US, code TSM, price $95. To buy one lot of TSMC in Taiwan costs NT$560,000, but in the US it only costs $95 (about NT$3,000). This is not an issue with TSMC itself, but a result of the difference in quantity per lot versus per share.

Because US stocks are traded per share, the overall threshold is much lower. Even stocks with higher prices allow investors to buy flexible quantities without being constrained by fixed batch sizes.

Comparison of Trading Environments in Different Markets

What Affects Stock Price Fluctuations?

The answer to how much one lot of stocks costs varies over time because stock prices are constantly changing. The main factors influencing stock prices include:

Company fundamentals are the core drivers. Companies with strong financial health and profitability attract investors, pushing prices higher. Conversely, declining performance can dampen investor confidence.

Macroeconomic factors also play a significant role. Indicators like GDP, interest rates, and inflation influence overall market performance and individual stock trends.

Market sentiment is often underestimated in its impact. Investors’ optimism or pessimism, political events, and global economic crises can quickly change stock prices. The sharp decline of many stocks during the COVID-19 pandemic in 2020 is a clear example.

Because of these factors, the same stock can have a vastly different price per lot at different times. Understanding these influences helps investors make more rational decisions.

Practical Recommendations

For new investors, understanding how much one lot of stocks costs is not just about calculating expenses. More importantly, it’s about recognizing the different trading mechanisms in various markets and choosing the appropriate market and trading method based on your capital.

Fractional share trading in Taiwan is suitable for investors with limited funds to test the waters; the flexible trading units in the US market offer more options for all investors. Regardless of which market you choose, continuous learning about fundamental analysis and risk management is the cornerstone of successful investing.