Must-know before buying stocks: The big differences between a lot, a share, and stock units. Complete analysis of the calculation methods for US and Taiwan stocks

Why is it so expensive to buy one lot of Taiwanese stocks, while US stocks are incredibly cheap?

Many novice investors are often shocked when they first enter the stock market — in Taiwan, a single lot is “one lot,” which can cost hundreds of thousands of NT dollars; but in the US, you can buy just “one share” for a few hundred US dollars to get started. This huge price difference actually stems from the completely different design of trading units in the two markets.

Today, we will thoroughly clarify these basic but easily confused concepts, so you understand why the purchase thresholds for the same company differ so much across markets.

The secret of stock units: starting with understanding “stock price”

Before discussing trading units, you must first understand what stock price is.

Stock price is the transaction price of a share, representing the buying and selling price per share, which fluctuates in real-time according to the market. Different countries price stocks in different currencies — US stocks in USD, Taiwanese stocks in TWD. For example, TSMC’s Taiwan stock price is about 561 TWD, while its US stock (TSM) is about 95 USD.

The stock price itself is just a “per share” price concept; what truly determines your purchase threshold is the minimum trading unit set by the trading market.

Taiwan stock trading units: one lot equals 1000 shares

Taiwan’s stock market has two basic trading unit concepts: one lot and one share.

1 lot = 1000 shares. That is, when you place an order to buy “one lot” of stock in Taiwan, you are actually purchasing 1000 shares.

Taking TSMC as an example:

• Current stock price: 561 TWD/share
• Cost to buy one lot = 561 × 1000 = 561,000 TWD (about 560,000)

For most retail investors, this is a huge capital outlay. Because the threshold for buying a full lot is so high, Taiwan’s market has developed two modes of trading:

Full lot trading: Must buy or sell in multiples of 1 lot (1000 shares)

• Trading hours: 09:00-13:30 during the day, 14:00-14:30 after hours
• High liquidity, but high capital requirement (at least 560,000 TWD to buy one TSMC lot)

Odd lot trading: Can buy or sell 1 to 999 shares

• Trading hours: 09:00-13:30 during the day, 13:40-14:30 after hours
• Lower capital threshold, but relatively less liquidity and slower matching

US stock trading units: the minimum is one share

The US stock market is much simpler — the trading unit is one share, with no “one lot” concept.

When buying US stocks, you can purchase any number of shares — 1 share, 10 shares, 100 shares — with no minimum trading unit restriction (unless you want to buy fractional shares, which is another matter).

For example, Tesla (TSLA): on August 2, 2023, the share price was 254.11 USD. If you want to buy Tesla, you only need 254.11 USD to own one share, far below any full lot threshold.

Stock face value vs actual stock price in Taiwan: don’t get them mixed up

Here’s a concept that can easily cause confusion — stock face value.

Taiwan implements a fixed face value system, where most companies’ stock face value is 10 TWD (representing the initial capital contribution unit). But the face value has nothing to do with the actual stock price. For example, TSMC’s face value is 10 TWD, but its market price is 561 TWD; some loss-making companies also have a face value of 10 TWD, but their stock price may only be a few TWD.

For investors, only the current market price matters — face value does not affect purchase decisions at all.

The chain reaction caused by differences in trading units between US and Taiwan stocks

The purchase cost of the same company listed in both markets can differ dramatically:

TSMC cross-market comparison:

• Taiwan stock (code 2330): 561 TWD/share × 1000 shares = 561,000 TWD (must buy one lot)
• US stock (code TSM): 95 USD/share × 1 share = 95 USD (about 3,000 TWD)

The threshold difference is nearly 19 times!

What factors drive the price fluctuations of stock units themselves?

After understanding trading units, let’s see why the same stock’s price can go up and down:

Company fundamentals: Financial statements, profitability, growth prospects are key factors in determining stock price. Improved performance attracts buyers, pushing the price higher.

Macroeconomic environment: GDP, interest rates, inflation, and other macro factors influence overall market sentiment and individual stock performance.

Investor psychology: Negative news, political turmoil, or global events (like pandemics) can trigger panic selling; conversely, optimistic expectations can drive prices up.

Tesla is a perfect example — in 2023, its stock price was 101.81 USD in January, and within just 7 months, it rose to 254.11 USD, doubling in value as the market reevaluated its performance and prospects.

Practical advice for novice investors

• US stocks advantages: flexible trading units, starting from 1 share, low capital requirements, cheap or free commissions
• Taiwan stocks advantages: familiar local market, simple tax system, but requires more capital or use of odd lot trading
• Limited funds: prioritize US stocks or Taiwan odd lot trading
• Long-term investing: full lot trading in Taiwan offers better liquidity, suitable for regular additions

Regardless of which market you choose, understanding the difference in stock units is the first step into the world of investing.