Essential for small investors! The complete guide to selling fractional shares: trading hours, fees, and trading tips all in one place

As Taiwan’s stock market becomes more democratized, an increasing number of new investors are paying attention to selling fractional shares. Compared to other investment methods, selling fractional shares offers greater flexibility but also faces challenges such as lower liquidity and higher difficulty in executing trades. This article will start with the basics of selling fractional shares and gradually explore trading hours, fee calculations, and practical tips to improve transaction success rates.

What Are Fractional Shares? The Fundamental Difference from Whole Shares

The minimum unit for trading whole shares is one board lot (1,000 shares), while fractional shares refer to holdings of less than 1,000 shares. The smallest trading unit for fractional shares is 1 share, which typically arises in the following situations:

Main reasons for fractional shares:

• Unfilled orders leaving residual small amounts
• Rapid stock price fluctuations preventing full execution at target prices
• Partial shares resulting from stock dividends or rights issues

In simple terms, trading fractional shares involves transactions of 1 to 999 shares, with each order not exceeding 999 shares. Understanding the characteristics of fractional shares is crucial for subsequent selling fractional shares operations.

The Golden Time to Sell Fractional Shares: Intraday vs After-Hours Trading

Before October 26, 2020, fractional shares could only be traded after market hours, which limited many small and medium investors. Since that date, investors can buy and sell fractional shares during regular trading hours, greatly enhancing trading convenience.

Current trading hours for fractional shares:

As shown, intraday trading hours fully overlap with those for whole shares, allowing orders to be submitted from 9:00 AM. Note that intraday orders must be placed via electronic trading platforms; manual phone orders are not permitted during this period.

How Intraday and After-Hours Trading Rules Affect Selling

Key rules for intraday trading:

Orders submitted for selling fractional shares starting at 9:10 will be matched through periodic auctions every minute. If an order is not fully executed or only partially filled, it will not automatically carry over to after-hours; investors must resubmit orders during after-hours trading. This is especially important—if a sell order set at a high price in the morning remains unfilled, investors need to reassess the market and place a new order in the afternoon.

Special considerations for after-hours trading:

During 13:40-14:30, investors can place manual orders via phone or electronic platforms. The key point is that the exchange conducts only one auction at 14:30; unfilled orders are automatically canceled and will not carry over to the next trading day. If a trade does not execute during after-hours, investors must wait until the next day to try again.

How to Calculate Selling Costs and Avoid Being Overcharged

The fee for selling fractional shares is calculated the same as for whole shares—0.1425% of the transaction amount. However, different brokers set minimum fees for fractional shares (usually around NT$1) and may offer discounts for electronic orders.

Example calculation:

Suppose an investor wants to sell 200 shares of TSMC (2330.TW), with a closing price of NT$1,065:

• Basic fee = 200 × 1,065 × 0.1425% ≈ NT$303.53
• With a 50% discount from the broker, actual fee = NT$303.53 × 50% ≈ NT$151.77

Comparison of fee structures among five major brokers:

Different brokers offer varying discount levels; investors should compare fee policies carefully before choosing a platform.

Five Practical Strategies to Increase Selling Success Rates

Many less-traded stocks have low fractional share trading volume, making it difficult to sell on the same day. Here are five effective methods to improve selling fractional shares success:

Strategy 1: Convert to Whole Shares

If your fractional holdings are thinly traded, consider buying enough shares to round up to a full lot (1,000 shares), then sell as a whole lot. For example, holding 700 shares of Xinjing (1582.TW), buy an additional 300 shares to reach 1,000, then sell as a whole lot—this often results in faster execution.

Strategy 2: Place a Limit Order at the Limit Down Price During After-Hours

In after-hours trading, since only one auction occurs at 14:30, if you need to sell quickly, place a limit order at the limit-down price. The auction follows a “maximum volume” principle, so orders at the limit-down price are more likely to be matched first.

Strategy 3: Test the Market Multiple Times During Intraday

Utilize the minute-by-minute matching process to adjust your sell price based on market movements. If your high price remains unfilled, quickly lower it before the next match to increase chances of execution.

Strategy 4: Monitor Trading Volume and Liquidity

Before placing an order, check the fractional share trading volume of the stock. If there is high buy-side interest during the day, seize the opportunity to sell at a reasonable price. If trading is quiet, consider waiting for after-hours or next day.

Strategy 5: Set Realistic Price Expectations

Avoid setting overly high sell prices. Compared to whole shares, fractional shares often require more patience to sell, and high prices significantly reduce the likelihood of execution. Price your order reasonably based on current market conditions.

Why Choose to Sell Fractional Shares? In-Depth Analysis of Pros and Cons

Main advantages of selling fractional shares:

Efficient use of capital
Fractional share trading allows low-threshold investments. Investors don’t need to buy a full lot of 1,000 shares; they can buy or sell smaller amounts based on available funds. For small investors, this means more liquidity for other expenses or investments.

Suitable for dollar-cost averaging

Since the minimum purchase is just 1 share, fractional shares are ideal for regular, small investments. Investors can contribute a fixed amount monthly, gradually building wealth without waiting for full lots.

Practical challenges of selling fractional shares:

Liquidity issues
This is the biggest hurdle. Compared to whole shares, fractional shares have much lower trading volume, leading to longer wait times for execution. For less popular stocks, it’s possible that orders remain unfilled throughout the trading day.

Higher transaction costs
Fractional shares incur minimum fees, often NT$1 or more. When trading small amounts, this fee can be a significant percentage—e.g., NT$20 fee on NT$1,000 worth of shares equals 2%, which eats into returns. Some brokers also charge additional service fees.

Restrictions in the selling process

You can only place sell orders; buy orders are not available for fractional shares. Also, fractional shares must be sold in one go; partial sales are not permitted. Additionally, if you convert fractional shares into whole shares, there are time limits—expired orders become invalid. Since fractional shares are somewhat incidental, brokers may not always have enough inventory, making it difficult to buy or sell the desired amount.

Alternatives to Selling Fractional Shares: Introducing CFDs

If investors are concerned about high transaction costs and liquidity issues with fractional shares, Contracts for Difference (CFD) offer another way to trade stocks in small amounts.

CFD is a financial derivative where traders speculate on the price difference between buy and sell prices without owning the actual stock. Compared to fractional shares, CFDs have advantages such as:

• Lower margin requirements: Usually only 5% of the full position needed as margin
• No additional commissions: Most brokers charge only the spread
• High liquidity: No issues with fractional share liquidity

Cost comparison: CFD vs fractional shares

Suppose buying 5 shares of Google at $400 each:

• Fractional shares: Need $2,000
• CFD (5% margin): Only need 5% of $2,000 = $100

Note that CFDs are more suitable for short-term trading; holding CFD positions overnight may incur interest charges, differing significantly from long-term fractional share investing.

Summary: Key Points for New Investors Selling Fractional Shares

Selling fractional shares has become an important way for small investors in Taiwan to participate in stock trading. Compared to traditional whole share trading, fractional shares require less capital and offer more flexibility, catering to diverse investment needs.

However, success in selling fractional shares depends on understanding the rules and costs:

• First: Fully understand trading rules, including minute-by-minute matching during intraday and the single auction at 14:30 after hours.
• Second: Accurately calculate transaction costs, considering broker-specific fees and discounts.
• Third: Master practical selling techniques, such as converting to whole shares, placing limit orders at the limit-down price, and dynamically adjusting prices.
• Fourth: Maintain rational decision-making, avoiding impulsive trades based on short-term volatility. Patience and strategic planning are key.

With technological advances and system improvements, selling fractional shares is becoming more convenient, making it an ideal starting point for millions of Taiwanese investors to begin wealth management. Whether you are a novice new to the stock market or a small investor seeking flexible capital allocation, the fractional share market offers valuable opportunities.