Recently, a friend asked me why stocks in Taiwan seem so expensive, while U.S. stocks are much cheaper. The underlying logic is actually quite simple, mainly due to the difference in trading units.

Let's start with the most basic concept. Stock price is the transaction price of one share of stock, representing how much money you need to buy or sell it. This price fluctuates in real-time, entirely based on the latest transaction prices between buyers and sellers. U.S. stocks are priced in U.S. dollars, while Taiwanese stocks are priced in New Taiwan Dollars. There's nothing special about that.

The key difference lies here: the trading unit for U.S. stocks is one share, while for Taiwanese stocks, it's one "lot," which equals 1,000 shares. That’s why the perceived difference is so large.

Here's a practical example to make it clearer. Suppose TSMC's stock price is 561 New Taiwan Dollars per share. Buying one lot of TSMC would cost 561 multiplied by 1,000, which is over 560k New Taiwan Dollars. That’s quite a sum for an average retail investor. But if you're looking at U.S. TSMC (ticker TSM), the same company might be priced at around $95 per share, which converts to about 3,000 Taiwan Dollars—quite a big difference.

Therefore, Taiwanese stocks later introduced fractional trading, allowing you to buy less than one lot, with a minimum of one share. This lowers the barrier to entry for investors. However, fractional trading generally has lower liquidity compared to full lots, so if your funds permit, it's better to buy whole lots whenever possible.

As for why stock prices go up or down, that involves more factors. The company's fundamentals, financial health, and profitability definitely influence the price. Additionally, macroeconomic conditions and investor sentiment also sway stock prices. Simply put, as long as investors are optimistic about a company's growth, the cost of one full lot may be high, but the price tends to keep rising. That’s why some people are willing to invest.

If you want to start trading, it's not too late. First, understand these basic rules, then choose a suitable trading method based on your capital—whether to buy whole lots or fractional shares. Most importantly, invest rationally and don’t let market emotions drive your decisions.