【Fractional Investment Guide】 After-hours trading, transaction mechanisms, and fee analysis — essential tips for small investors on how to place orders

Want to enter the stock market with a small amount of capital? Odd-lot investing has become the preferred financial management choice for many office workers and young investors. This article will delve into after-hours odd-lot trading times, trading mechanisms, cost structures, and practical tips to help you quickly master this investment tool.

What is an odd lot? Why do investors have odd lots?

The basic unit of stock trading is one board lot (1,000 shares), but investors often hold odd lots (1–999 shares) due to incomplete transactions. These scattered shares usually originate from the following situations:

• Orders not filled at the expected price
• Remainders from stock dividends or allotments
• Market fluctuations causing partial fills

In simple terms, an odd lot is “less than a full board lot”, with each order limited to 999 shares or less.

After-hours odd-lot trading times and mechanisms explained

In the past, odd-lot trading was limited to after-hours. Starting October 26, 2020, investors can trade odd lots during regular trading hours. Currently, odd-lot trading is divided into two main sessions, each with different rules:

Important notes on intraday trading

Intraday odd-lot trading times fully overlap with regular trading hours, so investors can submit orders from 9:00 AM. However, unfilled intraday orders will not automatically carry over to after-hours; they must be manually resubmitted. This is a key limitation for investors eager to exit positions quickly.

Advantages of after-hours trading

Compared to intraday trading, after-hours odd-lot trading offers more flexibility. Investors can place orders via online platforms or phone between 1:40 PM and 2:30 PM. The exchange conducts a single call auction at 2:30 PM, and any unfilled orders are automatically canceled immediately afterward, not carried over to the next day.

Cost analysis of buying and selling odd lots: how are fees calculated?

The transaction fee for odd-lot trading is the same as for full lots, at 0.1425% of the transaction amount. Different brokers set minimum fee thresholds (usually starting from 1 NT$) and offer discounts for electronic orders.

Fee calculation example

For example, buying 200 shares of TSMC (2330.TW, assuming a closing price of NT$1,065):

Basic fee = 200 × 1,065 × 0.1425% = NT$303.53

With a 50% discount for electronic orders:

Actual fee = NT$303.53 × 50% = NT$151.77

Major broker fee comparisons

Advantages and limitations of odd-lot investing

Investment advantages

Low capital threshold: Odd-lot investing allows small investors to participate without needing to invest thousands of dollars at once, suitable for dollar-cost averaging strategies.

Low trial costs: Beginners can familiarize themselves with the market using small amounts of capital, reducing learning costs.

Improved liquidity: The introduction of intraday trading mechanisms has significantly increased transaction opportunities.

Investment limitations

1. Lower liquidity

For less popular stocks, odd-lot transaction volumes are sparse, and matching takes longer, making quick transactions difficult.

2. Cost and fee risks

Odd-lot trading requires paying a minimum fee (around NT$20), which can be relatively high for small investments. It is recommended to buy at least NT$10,000 worth of stock per transaction to effectively dilute the cost.

3. Trading restrictions

You cannot place buy orders for odd lots; only sell orders are allowed. Full sale of holdings is required; the time limit for converting odd lots into full lots is restricted, and expired orders become invalid. If the broker’s inventory is insufficient, investors may not be able to purchase the desired quantity.

Practical tips to improve odd-lot transaction success rate

Strategy 1: Convert odd lots into full lots to accelerate transactions

If a single odd lot is difficult to sell, consider adding shares to reach a full 1,000-share lot, then sell via the more active full-lot market. For example, if holding 700 shares of a low-liquidity stock, buy an additional 300 shares to make a full lot, then quickly sell through the full-lot market.

Strategy 2: Post extreme price orders after hours

Since after-hours trading involves only one call auction, the exchange follows the “maximum transaction principle.” Investors eager to buy can place buy orders at the limit-up price, and those eager to sell at the limit-down price, greatly increasing the chance of execution.

Strategy 3: Stagger order times

If intraday orders are not filled, resubmit after hours or try again the next trading day. Multiple attempts can improve the chances of success.

Dividends and rights for odd-lot holdings

Odd-lot holders enjoy shareholder rights. When companies distribute dividends, odd-lot holders are entitled to cash dividends; during rights issues, odd-lot holders can convert to cash or sell collectively for proceeds. Investors do not need to worry about being excluded from dividends due to holding odd lots.

Alternative investment options for small investors

If concerns about liquidity and fees persist, investors can consider Contract for Difference (CFD) trading. CFDs only require a margin deposit (usually 5%–10%) and do not involve holding physical stocks, resulting in lower trading costs.

For example, buying 5 shares of Google at $400 each:

• Actual stock purchase: $2,000
• CFD trading (5% margin): only $100

Note that odd-lot investing is more suitable for long-term holding, while CFDs are better for short-term trading. Holding CFDs overnight incurs interest costs.

Conclusion

Odd-lot trading lowers the barrier for retail investors, especially those with limited funds. Mastering after-hours odd-lot trading times, cost structures, and trading techniques can help you execute small investments more efficiently. However, regardless of choosing odd-lot or other tools, investors should first assess their risk tolerance, learn basic analysis methods, and maintain rational decision-making to avoid chasing highs or selling lows, ensuring steady profits in the market.