Must-See for Small Investors' Counterattack | Intraday Fractional Shares vs. After-Hours Fractional Shares, How to Successfully Sell?

For many investors with limited funds, fractional share trading opens a new door. But buying is easy, how to sell is the key. This article整理s a practical guide to fractional shares, covering the differences between intraday and after-hours fractional trading, how to execute trades quickly, and how to minimize transaction fees.

What are fractional shares? Why do they exist?

Fractional shares refer to scattered stocks less than 1000 shares (1 lot), with the minimum trading unit being 1 share. When investors place orders that are not fully executed, or during the stock distribution process, fractional shares are generated. In the past, fractional shares could only be traded after hours, but since October 26, 2020, investors can buy and sell fractional shares during regular trading hours, greatly increasing trading flexibility.

The order limit for fractional shares is 999 shares, representing the fractional part of a stock. For small investors, the introduction of fractional trading means they can allocate funds to their favorite stocks without investing thousands of dollars at once, making it a good choice for regular, fixed-amount investing.

Intraday fractional shares vs. after-hours fractional shares｜Trading hours and rules differences

Fractional trading is divided into two periods, each with its advantages and disadvantages:

Intraday fractional trading (9:00-13:30)

• Order method: electronic orders only (broker trading platform)
• Matching method: first match at 9:10, then every 1 minute for a call auction
• Transaction priority: price priority, then submission time at the same price
• Features: more trading opportunities, but unfilled orders are not automatically retained for after-hours

After-hours fractional trading (13:40-14:30)

• Order method: electronic, phone, or manual orders
• Matching method: a single call auction at 14:30
• Transaction priority: price priority, then random order at the same price
• Features: flexible timing, but only one chance; unfilled orders are automatically canceled

If investors fail to execute during intraday trading, they need to resubmit orders after hours. For less popular stocks, this process may require repeated attempts to sell successfully.

Rights of fractional share holders｜Dividends, dividends, and trading are all fine

Investors holding fractional shares are also shareholders and enjoy the following rights:

Allow dividends — fractional share holders can receive dividends, although the amount is small, the rights are complete.

Allow dividend distribution — during dividend payout, fractional shares less than one share can be converted into cash or sold collectively for distribution.

Minimum trading unit is 1 share — starting with as little as NT$1000, but due to relatively higher transaction fees, investing over NT$10,000 per transaction is more cost-effective.

Can buy and sell — Taiwan Stock Exchange recognizes fractional share trading. As trading volume increases, liquidity improves, making it easier to sell.

How to sell fractional shares more easily? Three advanced tips

Although both intraday and after-hours fractional trading have matching mechanisms, the transaction success rate for less popular stocks still carries risks. Here are strategies to improve the chances:

Tip 1: Convert fractional to whole shares to increase success rate

Suppose you want to sell 700 shares of Xinjin (1582.TW), but this stock is not actively traded. You might consider buying 300 shares first to make a total of 1000 shares (1 lot), then sell via whole-share trading to quickly exit with higher liquidity.

Tip 2: Place buy orders at the limit up price, sell at the limit down price during after-hours

Since after-hours fractional trading only has one matching opportunity, it follows the “maximum transaction” principle in call auctions. To buy quickly, place a buy order at the limit up price; to sell quickly, place a sell order at the limit down price. This greatly increases the likelihood of execution.

Tip 3: Choose appropriate trading times

For stocks with low trading volume, multiple intraday matches may be less efficient than a single after-hours trade. Sometimes changing strategies and selecting different times to place orders can improve execution efficiency.

How much are the transaction fees for buying and selling fractional shares?

The transaction fee for fractional shares is the same as for whole shares, at 0.1425% of the transaction amount. However, each broker sets a minimum fee, usually NT$1.

For example, buying 200 shares of TSMC (2330.TW, assuming a closing price of NT$1065):

• Calculation: 200 shares × NT$1065 × 0.1425% = NT$303.53
• With a 50% discount for electronic orders: NT$303.53 × 50% = NT$151.77

Comparison of five major brokers

Electronic order discounts vary significantly; investors should choose brokers based on their trading habits.

Pros and cons of buying fractional shares

Advantages

The lowest entry barrier is the biggest attraction of fractional shares. Compared to whole shares, fractional trading allows investors with limited funds to participate in the stock market, “testing the waters” with small amounts without large upfront investments. It suits a dollar-cost averaging strategy, investing a fixed amount each month to reduce costs. Additionally, investors retain more liquidity for daily expenses or other investments.

Risks and limitations

Liquidity is still lower than whole shares, and non-hot stocks may take longer to execute. Although the minimum fee is low, the fee rate is relatively high, so small transactions may not be cost-effective. Moreover, fractional trading has time restrictions; converting fractional to whole shares has deadlines and expires if not completed. Fractional stock holdings are unstable, and investors may sometimes be unable to buy the desired quantity.

Are there other options for small transactions?

If concerned about liquidity and transaction costs of fractional shares, Contracts for Difference (CFD) offer an alternative.

CFDs are financial derivatives where investors only focus on the price difference, without holding physical stocks. Margin requirements are low (usually 5%-10%), much lower than fractional shares. For example, buying 5 shares of Google, originally costing $2000, can be done with just $100 margin via CFDs.

Most CFD platforms charge no commission, only spread costs, with transparent fee structures. They offer high liquidity and quick execution.

However, CFDs are more suitable for short-term traders, requiring daily settlement; overnight positions incur overnight interest. Fractional shares are better for long-term holding, while CFDs are suited for flexible trading—each has different use cases.

Small investors’ path to fractional share investing

With the popularity of intraday and after-hours fractional trading, small investors finally have the opportunity to allocate funds to their favorite stocks with small amounts. The key is understanding market mechanisms—knowing the differences between multiple intraday matches and a single after-hours match, mastering advanced techniques like converting fractional to whole shares and placing orders at limit up/down prices—to improve execution efficiency.

At the same time, investors must assess their risk tolerance and investment horizon, making rational choices between fractional shares and CFDs. Avoid blindly following trends; always prioritize risk management, which is the foundation of long-term profits.