Essential Guide for Small Investors | Complete Guide to Fractional Share Trading: How is the 1 Yuan fee calculated, and when is the best time to sell?

In recent years, fractional share investing has become the entry point for small investors in Taiwan to enter the stock market. However, many people are still confused about how fractional share transaction fees are calculated and how to choose trading sessions. This article will break down the practical details of fractional share trading one by one, helping you find the most cost-effective buying and selling methods.

Understanding Fractional Shares: Start Investing with Just One Share

What are fractional shares?

In Taiwan, the minimum unit of trading a full share is 1 lot (1,000 shares), but in practice, investors often hold scattered shares due to partial fills of their orders, which are called “fractional shares.” The minimum trading unit for fractional shares is 1 share, with a maximum of 999 shares per transaction.

Fractional shares usually arise in three situations:

• Partial execution of a full lot order
• Rapid stock price fluctuations leading to insufficient trading volume
• Small shares resulting from stock dividends and allotments

How to Choose Trading Times for Fractional Shares? The Big Difference Between Intraday and After-Hours Trading

Overview of trading sessions and rules

Since October 2020, the Taiwan Stock Exchange has allowed intraday trading of fractional shares, giving investors the option to:

Intraday fractional share trading (9:00-13:30)

• Limited to electronic orders (via securities app)
• The first matching occurs at 9:10, followed by continuous auction matching every minute
• Transaction order follows the “price priority, then time priority” principle

After-hours fractional share trading (13:40-14:30)

• Accepts electronic and telephone manual orders
• A single matching occurs at 14:30
• Transaction order is “price priority, then random order at the same price”

Important reminder: Unfilled orders during intraday trading will not automatically carry over to after-hours; you need to re-enter the order. Unfilled after-hours orders will be automatically canceled and will not carry over to the next day.

How to Calculate Fractional Share Fees? Examples Make It Clearer

Calculation method for fractional share fees

Fractional share transaction fees are the same as full shares, at 0.1425% of the transaction amount. However, each broker sets a “minimum fee” threshold and offers “electronic order discounts.”

Example calculation: Buying 200 shares of TSMC (2330.TW)

Assuming TSMC’s closing price is NT$1,065:

• Transaction amount: 200 × 1,065 = NT$213,000
• Fee payable: NT$213,000 × 0.1425% = NT$303.53
• With a 50% discount: NT$303.53 × 50% = NT$151.77

Scenario where fractional share fee is NT$1

Most brokers set a minimum fee of NT$1. When the transaction amount is small, the actual fee will be adjusted down to NT$1. For example, buying 50 shares with a total of NT$1,000 would normally incur NT$1.425 in fees, but it will be adjusted to NT$1.

Comparison of mainstream brokers’ fees

Choosing electronic orders with discounts and a minimum fee of NT$1 can effectively reduce costs for small investors.

How to Sell Fractional Shares Effectively? Practical Buying and Selling Tips

Non-mainstream stocks with fractional shares often have low trading volume and may not be completed on the same day. Here are some strategies to improve the chances of successful trades:

Strategy 1: Convert fractional to full shares

If during intraday trading, a stock’s fractional sell orders are piling up without buyers, consider purchasing fractional shares to round up to a full lot (1,000 shares) and then sell in the more active full-lot market.

Example: Holding 700 shares of Shin-Kin (1582.TW) but facing difficulty executing the order during the day, buy an additional 300 shares to reach 1,000 shares, then sell in the more liquid full-lot market.

Strategy 2: Use limit orders at price limits

Since after-hours trading only occurs once, to increase the likelihood of execution:

• When buying, place a “limit order at the limit-up price” → aligns with maximum transaction price, increasing chances of buy execution
• When selling, place a “limit order at the limit-down price” → similarly, increases chances of sell execution

Strategy 3: Understand dividend and bonus rules

Fractional shareholders are entitled to dividends. When stock dividends or allotments are issued, fractional shares less than one share are converted into cash or sold collectively for distribution. This is another way to gradually accumulate fractional shares.

Pros and Cons of Fractional Share Investing

Advantages

• Low investment threshold: No need to buy more than 1,000 shares at once, suitable for small, regular investments
• High flexibility: Can test specific stocks without large capital, reducing trial-and-error costs
• Efficient capital use: Keeps more liquidity for unexpected needs

Disadvantages

• Slow execution: Low trading volume, longer matching times
• Hidden costs: Besides the NT$1 minimum fee, some brokers charge additional service fees
• Trading limitations: Can only sell, not buy, fractional shares; must sell all at once; converting to full shares has time limits
• Inventory instability: Brokers have limited fractional share inventory, cannot guarantee availability of sufficient quantities

Alternative for Small Investors: Contract for Difference (CFD)

If concerned about transaction fees and liquidity issues with fractional shares, explore CFDs:

• Only require a margin deposit (usually 5-10%), lowering entry barriers
• No additional commissions, only spread costs
• Sufficient liquidity, allowing quick entry and exit

For example, buying 5 shares of Google costs about US$2,000, but via CFD, only about US$100 margin is needed. Note that CFDs are suitable for short-term trading; holding overnight incurs interest costs.

Mastering Fractional Share Trading to Unlock Flexible Wealth Management

Fractional share trading opens the door for small investors in Taiwan. Understanding trading session choices, how to calculate a NT$1 fee, and when to convert fractional to full shares will enable you to invest at the lowest cost.

Whether you choose quick intraday trades or precise after-hours orders, the key is to adopt the most suitable fractional share trading strategy based on your risk tolerance and investment horizon. Coupled with basic technical and fundamental analysis, avoiding blind following, you can steadily profit in the fractional share market.