Retail Investors Must Read: How to Successfully Sell Fractional Shares? Master These Key Points to Avoid Being Trapped

Small investors want to enter the Taiwan stock market but are limited by funds? Understanding the ins and outs of odd-lot trading becomes an essential course. Especially for investors who want to sell stocks, it’s crucial to understand trading rules to avoid wasting effort.

What exactly are odd lots? Why do they exist?

An odd lot refers to less than 1,000 shares (one trading lot) of scattered stock. When investors buy or sell stocks, if their order is not fully executed, leftover shares become odd lots. For example, if you want to buy 1,500 shares but only 900 are filled, the remaining 600 shares become an odd lot. The minimum unit for odd-lot trading is 1 share, allowing flexible allocation of small amounts of capital.

Odd lots can also occur during stock dividends and splits. When a company distributes dividends or conducts a stock split, investors may receive less than 1,000 shares, which are categorized as odd lots.

Different trading sessions: intraday vs. after-hours, how to choose?

To successfully sell stocks, first master the trading hours for odd lots. Since October 26, 2020, the Taiwan Stock Exchange has opened intraday odd-lot trading, no longer limited to after-hours.

Intraday trading hours start at 9:00 AM, with a call auction every 10 minutes until 1:30 PM. Orders during this period can only be placed via the broker’s electronic trading platform; manual phone orders are not accepted. If not filled during intraday trading, orders will not automatically roll over to after-hours; they must be resubmitted.

After-hours trading runs from 1:40 PM to 2:30 PM. Investors can choose electronic orders or call customer service for manual orders. Only one call auction occurs at 2:30 PM; unfilled orders are automatically canceled. To trade again the next day, orders must be resubmitted.

Trading rules cheat sheet: understand your rights in one go

Odd lots can also receive dividends and participate in rights issues – as shareholders, odd-lot holders enjoy dividend rights, albeit for smaller amounts, but their rights are intact.

Flexible dividend collection methods – when dividends are paid, odd lots less than one share are usually converted into cash or sold by the company and distributed proportionally.

Minimum trading amounts are limited – the minimum for odd-lot trading is 1 share, with a maximum of 999 shares per transaction. In practice, it’s recommended to invest at least NT$10,000 per transaction to avoid high transaction costs eating into returns.

How are transaction fees calculated? Different brokers have different policies

The transaction fee for buying or selling odd lots is the same as for whole lots, at 0.1425% of the transaction amount. However, many brokers set a “minimum fee,” usually starting at NT$1. Electronic orders often enjoy discounts.

For example, purchasing 200 shares of TSMC (2330.TW) at NT$1065 per share:

• Cost: 200 × 1065 × 0.1425% = NT$303.53
• With a 50% discount: NT$303.53 × 50% = NT$151.77

Discounts vary among brokers. Fubon Securities offers an 82% discount on electronic orders, Shin Kong Securities offers as low as 10%, and E.SUN Securities provides a 20% discount. Account opening requirements typically include ID, second ID, and bank account; KGI Securities also requires proof of financial capability.

Why is it difficult to execute odd-lot trades? Practical tips to resolve

For less popular stocks, odd-lot trading volume is low, and investors may not be able to execute trades smoothly on the same day. To improve selling success, consider these tips:

Combine odd lots into whole lots – if you hold 700 shares of Shin-Kong (1582.TW) but cannot sell, try buying an additional 300 shares to reach 1,000 shares, then sell in the active whole-lot market for faster execution.

Use price limits strategically – after-hours only has one call auction. If you need to execute quickly, try placing buy orders at the limit-up price or sell orders at the limit-down price. According to the “maximum transaction principle,” such orders are more likely to be prioritized for matching.

Choose trading times flexibly – liquidity varies at different times; observe which periods have more active buy/sell orders before placing your order.

Pros and cons of buying odd lots: what to consider before investing

Main advantages include low capital requirements, with entry possible at NT$1,000. Small, regular investments can reduce entry risk and are suitable for beginners to “test the waters” without large capital.

Challenges include lower liquidity and longer transaction times; the minimum fee policy makes small investments proportionally more expensive, as the fee rate for 100 shares and 1,000 shares is the same; odd-lot orders can only be sold, not bought, limiting trading flexibility.

Additionally, due to the randomness of odd-lot availability, brokers may not always have sufficient stock on hand, making it sometimes impossible to buy the desired amount. In other words, to successfully sell stocks, you need to understand the liquidity limitations of the odd-lot market.

What are alternative options for small investors?

If concerned about transaction fees and liquidity issues with odd-lot trading, consider other channels. Regardless of the method chosen, investors should first understand their risk tolerance, learn fundamental analysis, maintain rational investment discipline, and avoid blindly following trends.

Odd-lot trading has become a mainstream choice for small investors in Taiwan. Compared to traditional whole-lot trading, it offers more flexible capital allocation and more convenient trading channels. As long as you master the correct trading hours, fee structures, and selling techniques, retail investors can effectively use the odd-lot market to achieve their investment goals.