How to sell fractional shares? Master trading timing and execution skills to successfully offload them

Wanting to sell your fractional shares smoothly isn’t as simple as it seems. Many small investors find that, compared to buying fractional shares, selling them often faces liquidity issues and difficulty in completing transactions. This article will help you understand the fractional share market more deeply, revealing how to sell stocks efficiently to increase your chances of successful trades, so you can navigate Taiwan’s stock market with ease.

What Are Fractional Shares? Why Understand Their Trading Characteristics

Fractional shares usually result from incomplete stock transactions. In Taiwan’s stock market, the minimum trading unit for whole shares is one “lot,” which equals 1,000 shares. When investors hold less than 1,000 shares, these are called “fractional shares.” The minimum trading unit for fractional shares is 1 share, with a maximum of 999 shares per trade.

Fractional shares can arise for various reasons, such as rapid price fluctuations causing partial unfilled orders, or leftover shares during stock distribution processes. Understanding what fractional shares are is crucial for planning your buying and selling strategies. Since October 26, 2020, the Taiwan Stock Exchange officially opened intraday fractional share trading, allowing small investors to participate more flexibly in the stock market.

Intraday and After-Hours Trading Rules: Knowing When to Sell Your Fractional Shares

Taiwan’s fractional share trading is divided into two sessions, each with different rules and matching logic.

Intraday fractional share trading runs from 9:00 AM to 1:30 PM. Investors can submit orders via their broker’s electronic trading platform. Notably, the first matching occurs at 9:10 AM, followed by subsequent matches every minute through a call auction process. Orders are executed based on “price priority, then time priority”—meaning the best-priced orders are filled first, and among those at the same price, earlier orders are prioritized.

After-hours fractional share trading takes place from 1:40 PM to 2:30 PM. Investors can place orders via electronic platforms or by calling customer service for manual entry. Only one call auction matching occurs at 2:30 PM. Unlike intraday trading, unfilled orders after the call auction are automatically canceled and won’t carry over to the next trading day.

This timing impacts how you sell fractional shares: if your order isn’t filled during the day, you’ll need to resubmit during after-hours or wait until the next trading session.

Understanding Fee Structures: Hidden Costs When Selling Fractional Shares

The transaction fees for buying and selling fractional shares are the same as for whole shares—0.1425% of the transaction amount. However, fractional share trades often have a “minimum fee” limit, usually starting at NT$20. This fee structure can significantly impact small-value trades.

For example, if you sell 200 shares of TSMC at NT$1,065 per share, the total transaction amount is NT$213,000. The fee would be approximately NT$303.53. If your broker offers an electronic order discount (say, 50%), the actual fee might be around NT$151.77.

Different brokers offer varying fee discounts: Fubon Securities provides 18% of the standard fee, E.SUN Securities offers 20%, KGI Securities provides 60%, Shin Kong Securities offers 10%, and Uni-President Securities offers 16.8%. These discounts can make a big difference for frequent fractional share traders.

How to Sell Fractional Shares More Effectively? Four Practical Tips

Less popular stocks tend to have lower trading volumes for fractional shares, making it harder to execute orders quickly. For example, with stocks like Shin-Kong (1582.TW), which have lower liquidity compared to blue-chip stocks, selling 700 shares might not be completed smoothly during the day.

Tip 1: Convert fractional shares into whole shares before selling

If you find it difficult to sell fractional shares, consider “consolidating” them into whole shares. Buy enough shares to reach a full lot (1,000 shares), then sell the entire lot. Since popular stocks have much higher trading volumes for whole shares, this approach can significantly improve the speed and certainty of your sale.

Tip 2: Use after-hours call auction to set high or low prices

If you’re confident about buying a stock, try placing a buy order at the limit-up price during the call auction. The auction favors orders with the highest volume, so bidding at the limit-up can increase your chances of execution. Similarly, if you want to sell quickly, place a sell order at the limit-down price to maximize the likelihood of a successful sale.

Tip 3: Choose times with higher liquidity

Popular stocks like TSMC or MediaTek have frequent matching opportunities during the day, making transactions more stable. For less liquid stocks, it’s better to place orders during after-hours sessions to increase the chance of matching with other investors.

Tip 4: Set reasonable order prices

Setting your sell price too high or buy price too low can hinder order execution. Placing orders at or slightly below the current market price can improve the chances of your order being filled.

How to Buy Fractional Shares and Open an Account: Preparing for Future Sales

Buying and selling fractional shares follow the same process as whole shares. Investors simply switch to the “fractional share trading” mode on their broker’s app. When placing an order, the unit changes from “lots” to “shares” (between 0 and 999 shares).

Account opening requirements are similar: usually, a national ID card, a second ID (health insurance card or driver’s license), and a bank account are needed. Some brokers, like KGI Securities, may require additional proof of financial status. Minimum fees are generally NT$1, but discounts for electronic orders vary. Choose a broker that suits your trading frequency and needs.

Pros and Cons of Investing in Fractional Shares: Is It Right for You?

Advantages:

• Lower investment threshold: Instead of needing thousands of NT dollars for whole shares, you can start with around NT$1,000 to buy high-priced stocks.
• Accessibility for small investors: Allows those with limited funds to “test the waters” and learn about the stock market without large commitments.
• Suitable for dollar-cost averaging: Helps build disciplined investment habits over time.

Disadvantages:

• Lower liquidity: Fractional shares have fewer buy/sell orders, leading to longer waiting times or even inability to complete trades on the same day.
• Higher relative fees: Due to minimum fee limits, small trades can have disproportionately high costs compared to whole shares.
• Limited order types: You can only sell, not buy, fractional shares, and must sell the entire holding at once—reducing flexibility.
• Quantity limitations: Sometimes, brokers may not have enough fractional shares available to fulfill your desired trade volume.

Alternatives for Small-Scale Trading Beyond Fractional Shares

If liquidity and fee costs are concerns, consider derivatives like Contracts for Difference (CFDs). CFDs require only a small margin—often around 5%—to control larger positions. Brokers usually charge spreads instead of commissions, which can be more cost-effective for small trades.

For example, buying 5 shares of Google at $400 each costs $2,000. With CFDs requiring only 5% margin, you might only need $100 to open the position. However, CFDs are more suitable for short-term trading, as they involve daily settlement and overnight interest costs, unlike long-term holding in fractional shares.

Summary: Plan Wisely, Trade Fractional Shares with Confidence

As Taiwan’s stock market continues to evolve, fractional share trading is becoming an increasingly popular option for small investors. Selling fractional shares is no longer a daunting task—by mastering trading timing, understanding fee structures, and applying effective trading strategies, investors can smoothly sell their holdings.

However, successful fractional share trading requires knowledge and strategic planning. First, assess your risk tolerance and choose suitable investment products. Second, learn basic investment analysis to avoid impulsive decisions. Lastly, stay rational and avoid reacting to short-term volatility. With these steps, small investors can find their rhythm in the fractional share market and steadily grow their investment returns.