Must-read for small investors: The complete guide to fractional share trading, how to flexibly utilize during and after trading hours?

What are odd lots? Why should you understand odd lot trading?

The basic unit of stock trading is one board lot, which represents 1,000 shares. However, investors often hold fractional shares less than 1,000 shares in actual operations, known as odd lots. The minimum trading unit for odd lots is 1 share.

Odd lots usually arise from the following situations: incomplete execution of a trading order, rapid stock price fluctuations leading to fewer shares filled than expected, or leftover shares when listed companies distribute shares. Odd lot trading refers to transactions involving fewer than 1,000 shares, with each order not exceeding 999 shares, often jokingly called “stock leftovers” by investors.

This type of trading is significant for small investors, as it greatly lowers the investment threshold, allowing investors with limited funds to participate in the stock market.

Detailed rules for intraday and after-hours trading

Trading time comparison

Odd lot trading is divided into intraday trading and after-hours trading, each with its own characteristics:

Intraday trading hours: 9:00 AM to 1:30 PM

• Order method: electronic orders only (via broker online platforms)
• Execution method: first matching at 9:10 AM, then matching every minute via call auction
• Order priority: price priority, then submission time for the same price
• Features: high trading frequency, more chances of execution

After-hours trading period: 1:40 PM to 2:30 PM

• Order method: electronic or manual phone orders
• Execution method: a single call auction at 2:30 PM
• Order priority: price priority, then random arrangement by computer at the same price
• Features: only one matching opportunity, unfilled orders are automatically canceled

Key trading regulations

Orders that are unfilled during intraday hours will not automatically carry over to after-hours, so investors need to resubmit. Similarly, unfilled orders during after-hours will not carry over to the next day, requiring re-entry the following day.

Odd lot dividends and dividends: Odd lot holders are entitled to dividend rights equivalent to full shareholders; for fractional shares less than one share, dividends can be converted into cash.

Minimum trading unit: 1 share, with purchase quantities in multiples of 1 share. Theoretically, you can buy odd lots with NT$1,000, but practically, it’s recommended to prepare at least NT$10,000 to effectively offset transaction fees.

Analysis of odd lot transaction fees: calculation methods and discounts

Fee calculation method

The transaction fee for odd lots is the same as for full lots, calculated at 0.1425% of the transaction amount. Different brokers offer varying minimum fees for odd lots and discounts for electronic orders.

Example calculation: Buying 200 shares of TSMC (assuming closing price NT$1065)

• Basic fee: 200 × 1065 × 0.1425% = NT$303.53
• With a 50% discount: NT$303.53 × 50% = NT$151.77

Major broker fee comparison table

Account opening and trading process

Investors can switch to “Odd Lot Trading” mode directly within their existing broker app. The order interface will automatically change from “boards” to selecting quantities between 0 and 999 shares. Opening an account typically requires a national ID card, health insurance card (or driver’s license), and bank account.

Tips for selling odd lots more easily: practical strategies

Trading volume for non-popular stocks’ odd lots is relatively sparse, so investors may not be able to complete trades smoothly during intraday hours. The following strategies can improve the chances of successful transactions:

Converting odd lots into full lots strategy

Suppose you want to sell 700 shares of Shin Shin (1582.TW), but the odd lot sell order during intraday is not filled. You can first buy 300 shares to reach 1,000 shares (one board lot), then sell through the more active full lot trading, greatly increasing the likelihood of execution.

Using after-hours call auction features

After-hours only conducts one matching, following the “maximum transaction principle.” Therefore:

• Buyers eager to purchase can place buy orders at the limit-up price to increase chances
• Sellers eager to sell can place sell orders at the limit-down price to ensure the single after-hours match is executed

This method is effective for investors who are determined to complete the trade, but be aware that price deviations may carry risks of loss.

Pros and cons of investing in odd lots

Core advantages

1. Significantly lower investment threshold Small investors can avoid the need to buy in multiples of 1,000 shares, allowing flexible purchase quantities, suitable for dollar-cost averaging strategies, and maintaining sufficient liquidity for daily needs.

2. Low-cost testing Investors can use less capital to explore and understand the stock market, gradually accumulate experience, and reduce initial learning costs.

Main limitations

1. Limited liquidity Compared to full lots, odd lots have lower trading volume, longer matching times, especially noticeable in less popular stocks.

2. More complex cost structure

• Minimum fee regulations (usually NT$20 or more)
• High fees relative to small purchases, which can eat into profits
• Additional service fees beyond normal commissions

3. Limited trading flexibility

• Fixed trading hours for odd lots, with specific time restrictions for intraday and after-hours
• Only sell orders are allowed; buy orders cannot be placed as odd lots
• Must sell all at once; partial sales are not permitted
• Conversion from odd lots to full lots has a time limit; expired orders become invalid

Summary: How small investors can make good use of the odd lot market

With the improvement of trading mechanisms, odd lot trading has become an excellent channel for Taiwanese investors to enter the stock market. Whether through high-frequency matching during intraday or concentrated trading after-hours, investors can flexibly utilize each period’s features to optimize execution efficiency.

To succeed in odd lot trading, three key points should be remembered: first, fully understand your risk tolerance and investment goals; second, master basic investment analysis methods and techniques; third, maintain rational decision-making, avoiding blind following and emotional trading.

Effective odd lot investment strategies, combined with proper timing and cost control, can help small investors steadily accumulate wealth.