Recently, many novice investors have been asking a question: why do stock trades in Taiwan cost so much, while in the U.S. they’re so cheap? The key lies in the difference in trading units. Today, I’ll explain this most basic concept—yet one that’s also very easy to mix up.

First, you need to understand what a stock price is. A stock price is the trading price of a stock, showing how much money you need to pay to buy one share, or how much you will receive when selling. This price changes in real time and keeps moving based on the transaction prices between buyers and sellers. For example, TSMC’s share price is 561 New Taiwan Dollars, while in the U.S. Tesla is 254 dollars—both refer to the price for “one share.”

This brings us to the main point—how many shares are equal to one lot? In Taiwan’s stock market, one lot equals 1,000 shares. In other words, when you buy one lot of stock, you’re actually buying 1,000 shares. But in the U.S. stock market, there’s no concept of “one lot.” The minimum trading unit in the U.S. is just one share.

The result of this difference is very clear. Suppose TSMC’s share price is 561 New Taiwan Dollars; buying one lot would cost 561 multiplied by 1,000, which equals 560,000 New Taiwan Dollars. By comparison, buying TSMC (TSM) in the U.S. only costs about 95 dollars—roughly just a few thousand New Taiwan Dollars—so the entry threshold is much lower. No wonder many retail investors feel that Taiwanese stocks are ridiculously expensive.

So, to lower the entry barrier, the Taiwanese market introduced fractional share trading, allowing you to buy less than one lot of stock. However, fractional shares have poorer liquidity and limited trading hours, so if you have the capability, it’s still recommended to trade in full lots whenever possible.

When it comes to how many shares make up one lot, what’s really behind it is the difference in trading systems between the two markets. In Taiwan, the minimum trading unit is one lot (1,000 shares); in the U.S., it’s one share. This also explains why you may see U.S. stock prices often in the hundreds of dollars per share, yet the trading costs can be lower than in Taiwan.

Besides trading units, other factors also affect stock prices. The company’s fundamentals are the most important—companies with strong financial health and strong profitability naturally tend to have higher stock prices. Macroeconomics also matters; factors like GDP and interest rates can influence the stock market. Finally, market sentiment plays a role: if investors are optimistic, they buy; if they’re pessimistic, they sell. Panic sentiment can directly lead to declines in the stock market.

If you want to start trading stocks, many platforms now support trading U.S. stocks and other markets. You can open an account and deposit funds directly on those platforms, then you can start placing orders for the stocks you want.