Full Analysis of Odd Lot Trading Hours: How to Place Orders for Easier Execution? Understand the Intraday and After-Hours Trading Rules in One Go

Small investors entering the stock market often find fractional share trading an unavoidable topic. Compared to the thousands of dollars typically required for full-share transactions, fractional shares offer a more flexible way to enter investments. However, many investors are unclear about the differences in fractional share trading hours and do not understand why the same stock may not sell during trading hours but can be successfully traded after hours. Today, we will delve into the operational logic of fractional share trading.

What Are Fractional Shares? Why Do They Appear?

The standard trading unit for stocks is one share, which equals 1,000 shares. However, in actual investing, investors often hold less than 1,000 shares due to unfilled orders, rapid stock price fluctuations, or dividend and rights issues. These are called “fractional shares.” The minimum trading unit for fractional shares is 1 share, and each order cannot exceed 999 shares.

In simple terms, fractional shares are the “leftover” parts outside of full shares, often arising from randomness.

Rules for Fractional Share Trading Hours: Core Differences Between During and After Market

Before October 26, 2020, fractional share trading was only available after market hours, and the trading times and volume could not meet the diverse needs of small investors. After reforms, investors can now trade fractional shares during market hours, with more options.

Below is a detailed comparison of fractional share trading hours:

Source: Taiwan Stock Exchange

Features of the during-market session: Investors can submit fractional share orders starting at 9:00 AM, but only through broker electronic trading platforms. If orders are unfilled or partially filled during the day, unfilled parts will not automatically carry over to after hours; investors must resubmit after hours or the next day.

Features of the after-market session: From 1:40 PM to 2:30 PM, investors can place manual orders via online or direct broker customer service. The exchange performs a single batch auction at 2:30 PM. Unfilled orders are canceled immediately and will not carry over to the next trading day.

How Are Transaction Fees for Fractional Shares Calculated? Which Broker Is More Cost-Effective?

The transaction fee for fractional shares is calculated the same as for full shares, at 0.1425% of the transaction amount. However, different brokers set varying minimum fee standards and offer different discounts.

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

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

Below is a comparison of five major brokers’ fractional share trading costs:

Recommendation: The greater the discount, the more cost-effective. If your single transaction is less than 10,000 NT$, the transaction fee proportionally takes up a larger part of your cost. It’s advisable to accumulate funds before trading.

How to Sell Fractional Shares More Easily? Master These Tips for Better Results

Less popular stocks often have low fractional share trading volume, and orders may remain unfilled during trading hours. Here are some practical tips to improve the chances of successful transactions:

Strategy 1: Convert Fractions to Full Shares

If a less popular stock has a large sell order for fractional shares during trading hours, investors can reverse the process—buy enough shares to make a full 1,000-share lot, then sell via the more liquid full-share market. For example, if you hold 700 shares of Xinjin (1582.TW), you can buy an additional 300 shares to reach 1,000 shares, then sell as a full lot, greatly increasing the likelihood of a successful trade.

Strategy 2: Use After-Hours Batch Auction

Since after-hours trading involves only one auction based on “maximum trading volume,” investors eager to sell can set a sell order at the limit-down price, making it more likely to be matched during the auction. Conversely, to buy a desired stock, set a buy order at the limit-up price.

Strategy 3: Place Orders Over Multiple Days

If your order remains unfilled during the day, consider re-placing it on subsequent days. Changing the fractional share trading hours segment may help you find a matching counterparty.

Advantages and Limitations of Fractional Share Investing

Advantages:

• Lowest Capital Requirement: Buy as little as 1 share, suitable for small investors testing the waters
• Friendly for Regular Investment: Can buy small amounts regularly, diversifying risk
• Flexible Liquidity: No need to invest large sums in a single stock, leaving more living funds available

Limitations:

• Lower Liquidity: Less popular stocks have fewer fractional share trades, leading to longer matching times
• High Transaction Cost Ratio: For small investments, fees constitute a larger proportion of costs, reducing economic efficiency
• Trading Restrictions: Fractional shares can only be sold, not bought via limit orders; converting fractional to full shares has time constraints

Summary: Who Is Suitable for Fractional Shares?

Fractional share trading is especially suitable for small investors planning long-term investments. If your funds are limited but you want to participate in the stock market or accumulate shares of quality companies through regular small purchases, fractional trading is a good choice. However, be sure to pay attention to the trading hours differences, fee calculations, and potential liquidity issues with less popular stocks.

By understanding the characteristics of during and after-market sessions, utilizing the batch auction mechanism, and choosing brokers with favorable fee discounts, you can more efficiently achieve your trading goals in the fractional share market.