Recently, I’ve noticed more and more small investors starting to pay attention to fractional share trading, mainly because over the past few years, Taiwan’s stock exchange has opened up intraday fractional share trading, making buying and selling fractional shares much more convenient. Today, I want to share some practical knowledge about fractional shares that I’ve organized, especially tips on how to sell fractional shares more effectively.

First, let me briefly explain what fractional shares are. The minimum unit for whole shares is one lot (1,000 shares), but sometimes we might only hold a few hundred or a few dozen shares, and these are called fractional shares. Fractional shares usually result from incomplete transactions when buying or selling, and the minimum can be as little as 1 share.

Regarding trading hours, fractional share trading now is divided into two periods: during market hours and after hours. Market hours are from 9:00 AM to 1:30 PM, where you can place electronic orders through your broker’s app, with matching occurring every minute; after hours are from 1:40 PM to 2:30 PM, where orders can be placed electronically or by phone, with a single closing auction at 2:30 PM. This is a big change from the era when trading was only possible after hours, and liquidity has definitely improved quite a bit.

As for transaction fees, the rate for buying and selling fractional shares is 0.1425% of the transaction amount, the same as for whole shares. However, most brokers set a minimum fee (usually starting at 1 NT dollar), and electronic orders often have discounts. For example, buying 200 shares of TSMC at a stock price of 1,065 NT dollars would incur about 303 NT dollars in fees; with a 50% discount, it’s only about 152 NT dollars. Different brokers offer varying discounts—Fubon at 1.8%, E.SUN at 2%, Union at 1.68%, etc.—so it’s worth comparing before opening an account.

Now, let’s get to the main point—how to sell fractional shares more easily. This is where many people get stuck. If you hold less popular stocks, the trading volume for fractional shares may be quite low, and you might not be able to place an order during market hours. In such cases, here are a few methods you can try.

The first trick is called “convert fractional to whole.” Suppose you want to sell 700 shares of a less popular stock, but during market hours, there’s little buy volume for fractional shares. You can buy an additional 300 shares to make a full lot of 1,000 shares, then sell the whole lot through the more liquid whole-share trading. Although this involves paying an extra transaction fee for the purchase, the speed and ease of selling the whole lot are much better, and sometimes it’s more cost-effective.

The second is an after-hours trading tip. Since after-hours trading only matches once, if you’re in a hurry to sell your fractional shares, you can try placing a sell order at the limit down price. Under the principle of “maximizing the chance of execution,” this can increase the likelihood of a trade. Conversely, if you want to buy fractional shares of a certain stock, you can place a buy order at the limit up price.

However, honestly, fractional share trading also has obvious disadvantages. Liquidity is indeed lower than for whole shares, and sometimes it takes several days to complete a trade. Also, while transaction fees are low, if the trading amount is small, the fee can represent a large percentage of your investment, making it not worth it. For example, buying only 1,000 NT dollars worth of fractional shares might incur over 1 NT dollar in fees, which eats into your returns. Therefore, it’s generally recommended that the total amount of fractional shares purchased should be at least 10k NT dollars to avoid being dragged down by fees.

Another thing to note is that fractional shares can only be sold via order; you cannot place a buy order for fractional shares. Also, when selling, you must sell the entire position at once—you cannot sell in parts. This can be limiting for investors who want to profit gradually.

In summary, fractional share trading is suitable for long-term small investors who want to gradually accumulate stocks they like with small amounts of capital. But if you’re particularly concerned about transaction fees and liquidity, you might consider other tools. Regardless of the method you choose, the most important thing is to understand your own risk tolerance, invest rationally, and avoid blindly following trends.