Complete Guide to Taiwan Fractional Share Trading | Trading Hours, Fees, and Practical Tips in One Go

Odd-lot investing has become a stepping stone for small investors entering the stock market. Compared to the tens of thousands of yuan required for full lots, odd-lot shares can be purchased with just a few thousand yuan to start investing. But here’s the question: are odd-lot shares really that easy to sell? What are the key points in trading rules? This article summarizes the core knowledge of odd-lot trading to help beginners get started quickly.

First, understand what odd-lot shares are

When an investor holds fewer than 1,000 shares (1 lot) of a stock, these scattered shares are called odd-lot shares, with the minimum trading unit being 1 share. How do odd-lot shares usually come about? Mainly in two ways: one is when a limit order is only partially filled; the other is the leftover shares generated during stock dividends or rights issues.

Unlike the minimum unit for regular stock trading, which is 1 lot (1,000 shares), odd-lot trading allows each order to be no more than 999 shares. Simply put, odd-lot shares are fractional share trades, enabling investors with limited funds to participate in listed companies’ investments.

When is odd-lot trading open? Complete schedule overview

Before October 26, 2020, odd-lot shares could only be traded after hours, which was extremely inconvenient for working professionals. Now, odd-lot trading has been included during regular trading hours, giving investors more flexibility.

Note: Orders not filled during intraday trading will not automatically carry over to after-hours. Investors must re-submit orders. Unfilled after-hours orders at 14:30 will be automatically canceled and will not carry over to the next day.

Rights and restrictions of odd-lot trading

Investors holding odd-lot shares enjoy shareholder rights, such as receiving dividends and rights issues, and can convert dividends into cash or sell collectively. However, there are clear regulations:

• Odd-lot shares can be freely bought and sold, with each order being between 1 and 999 shares
• Odd-lot shares can participate in dividends and rights issues
• Odd-lot shares can be used as a long-term periodic investment tool

How high are the transaction costs for odd-lot trading? Fee breakdown

The transaction fee for odd-lot trading is exactly the same as for full lots, at 0.1425% of the transaction amount. However, each broker sets a minimum fee standard (usually 20 NT$), and offers various discounts for electronic orders to encourage online trading.

For example, buying 200 shares of TSMC (2330.TW, assuming a closing price of 1065 NT$):

Basic fee: 200 × 1065 × 0.1425% = 303.53 NT$

With a 50% discount: 303.53 × 50% = 151.77 NT$

Comparison of major brokers’ fees:

Major risks and drawbacks of odd-lot trading｜Three key risks investors must know

Although the threshold for odd-lot trading is low, its disadvantages should not be overlooked. To be a savvy odd-lot investor, you must fully understand these potential issues:

Limited liquidity, slow transaction speed

Compared to popular full lots, non-mainstream stocks have very limited odd-lot trading volume. This means that after placing an order, it may take a long time to execute, or you might need to chase multiple days to complete the trade. For example, for obscure stocks like Xinjin (1582.TW), investors might not be able to sell 700 shares during the trading day and may have to wait until after hours or the next day.

Hidden costs and fee traps

Odd-lot trading involves not only paying basic fees but also incurring various hidden costs. The minimum fee system means that small transactions can have significantly higher effective fee rates. For example, buying 1,000 NT$ worth of odd-lot shares with a fee rate of only 0.1425% could still be limited by the minimum fee, resulting in a much higher actual fee rate than full lots. Additionally, some brokers may charge extra service fees, increasing overall costs.

Limited flexibility in buying and selling, operational restrictions

Odd-lot investors face several restrictions: they can only place sell orders, not buy orders; must sell all odd-lot shares at once; converting odd-lot shares into full lots has a time limit, after which the order becomes invalid; and if the broker’s inventory is insufficient, they may not be able to buy the desired amount. These limitations greatly reduce trading flexibility, especially problematic for investors needing to adjust their positions quickly.

How to sell odd-lot shares without getting stuck? Practical tips revealed

Since liquidity is an issue with odd-lot shares, how can investors improve their chances of successful transactions? Here are some strategies:

Strategy 1: Convert odd-lots into full lots

If your sell orders for odd-lot shares keep failing, consider buying enough full lots to reach 1,000 shares and then sell in the more active full-lot market. This not only allows for quick disposal but also benefits from higher liquidity and better prices.

Strategy 2: Use limit prices

During after-hours trading, since only one call auction occurs at 14:30, investors eager to execute can set buy orders at the limit-up price or sell at the limit-down price. According to the “maximum transaction” principle, setting extreme prices can significantly increase the chance of execution.

Strategy 3: Trade during peak hours

Try to submit orders during intraday hours of 09:00-13:30, when matching frequency is highest (once per minute), greatly increasing the likelihood of successful trades compared to the single call auction after hours.

Weighing the pros and cons of odd-lot investing

Main advantages:

• Significantly lower capital threshold, starting with just a few thousand NT$
• Provides small investors a “trial” opportunity to participate in quality companies
• Suitable as a long-term periodic investment tool, especially for salary earners

Core disadvantages:

Besides the liquidity, cost, and flexibility issues discussed earlier, odd-lot investors should also recognize that this trading method is more suitable for long-term holding strategies. Short-term trading often suffers from unfavorable cost-benefit ratios, with fees eroding profits and risking losses.

Another avenue for small investors｜CFD contracts

If you are still concerned about high fees and liquidity issues in odd-lot trading, CFD (Contract for Difference) offers a new approach. CFD trading only tracks price movements, without holding physical stocks, requiring only a small margin deposit to participate. For example, with Google stock:

Buying shares directly: 400 USD × 5 shares = 2000 USD
CFD trading (5% margin): only 100 USD

Thanks to transparent spreads and ample liquidity, CFDs are especially suitable for short-term traders. However, be aware that overnight positions incur interest costs, so choose based on your trading cycle.

Summary: Build your own odd-lot strategy

Odd-lot trading has become an integral part of Taiwan’s investment ecosystem. Compared to the high threshold of full lots, despite its disadvantages, odd-lot trading remains an ideal entry tool for small investors. Successful odd-lot investors need three key skills: first, a deep understanding of their own risk tolerance; second, mastery of basic investment analysis; third, maintaining rationality and avoiding impulsive chasing or panic selling.

Overall, odd-lot trading has not only changed the landscape for retail investors but also injected new vitality into the stock market. As long as investors fully understand the disadvantages of odd-lot trading, they can leverage its strengths, avoid pitfalls, and achieve long-term wealth accumulation with limited funds.