Must-Read for Small Investors | How to Buy Fractional Shares Cost-Effectively? Trading Hours, Fees, and Practical Tips Cheat Sheet

What are odd lots? Why should you understand how to buy odd lots?

The standard trading volume for stocks is one lot (1,000 shares), but investors often hold scattered stocks of less than 1,000 shares due to unfilled orders or stock distribution, which are called “odd lots.” The minimum trading unit for odd lots is 1 share, also known as “stock fragments.”

The emergence of odd lot trading mainly addresses the issue of scattered stocks caused by incomplete transactions or stock dividends and distributions. Rapid price fluctuations or insufficient trading volume can lead to orders not being fully executed.

How to buy odd lots? What are the trading time restrictions?

In the past, odd lot trading was only available after market hours, and the trading hours and volume could not meet the needs of small investors. Since October 26, 2020, the Taiwan Stock Exchange has allowed investors to buy and sell odd lots during regular trading hours, with the following rules:

The intraday trading period overlaps completely with regular stock trading. Investors can submit odd lot orders from 9:00 a.m., but must do so through the broker’s electronic trading platform. If the order is not fully executed during the day, it will not automatically carry over to after-hours; it must be resubmitted.

The after-hours trading provides more flexibility, allowing orders from 13:40 to 14:30. However, only one auction matching occurs, and unfilled orders are canceled immediately—they will not carry over to the next day.

How to buy odd lots? Fee calculation and comparison among brokers

The fee structure for buying and selling odd lots is the same as for full lots, calculated at 0.1425% of the transaction amount. Different brokers set “minimum fee thresholds” and offer online order discounts to encourage internet trading.

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

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

Below is a summary of five major brokers’ fee policies for reference:

How to buy odd lots without losing out? Practical trading tips revealed

Although odd lot trading facilities are improving, liquidity for less popular stocks remains relatively low, and single orders may not always be executed smoothly. For such situations, investors can adopt the following strategies:

Strategy 1: Convert odd lots into full lots to accelerate execution

If intraday odd lot quotes show a large amount of unfilled sell orders, investors can first buy the missing shares to reach 1,000 shares (one lot), then sell through more active full-lot channels. This greatly improves the chance and speed of transaction. For example, to sell 700 shares of Shin-Kong (1582.TW), buy 300 shares first to reach 1,000 shares before trading.

Strategy 2: Use limit orders at the limit-up or limit-down prices to increase success rate

Since after-hours only involves one closing auction, if investors urgently want to buy a specific stock, they can try placing a limit order at the limit-up price. Under the “priority of maximum transaction volume” rule, this can significantly increase the chance of successful purchase. Conversely, if you want to quickly sell your held odd lots, placing a limit order at the limit-down price can also maximize the probability of execution under the same principle.

Pros and cons of investing in odd lots

Advantages:

• Lower entry barrier: No need for large capital; small amounts allow participation in popular stocks, maintaining liquidity for daily life and flexible investments.
• Suitable for dollar-cost averaging: Can serve as a long-term financial tool, allowing easy market access without much effort.
• Lower trial costs: Use small funds to “test the waters” and familiarize with the market, with more reasonable risk exposure.

Disadvantages to watch out for:

• Lower liquidity: Buy/sell orders are much smaller than full lots, often taking longer to match, making transactions more difficult.
• Fee erosion: Minimum fee rules are usually around NT$20; small transactions can have fees eat into profits. It’s recommended to buy over NT$10,000 worth to maintain reasonable returns.
• More trading restrictions: Odd lots can only be sold, not bought via limit orders; must sell all at once; time limits for converting odd lots to full stocks may expire, making them invalid, and brokers may not process conversions if stock is insufficient.

Rules for odd lot dividends and stock distribution

Odd lot holders enjoy the same shareholder rights as full lot holders, including dividends and stock distributions. When dividends are paid, fractional shares less than one share can be converted into cash or the stock exchange may sell all odd lots collectively, distributing the proceeds to odd lot shareholders.

Summary: Build your own odd lot investment plan

With technological advances and optimized trading mechanisms, buying odd lots is no longer difficult. Odd lot trading offers a more flexible and accessible investment approach, allowing small investors to participate without purchasing a full lot. By understanding intraday and after-hours trading differences, calculating fees carefully, mastering strategies like converting odd to full lots and price tactics, investors can navigate the odd lot market more effectively.

The key advice is: first, assess your risk tolerance and investment goals; second, deepen your decision-making with fundamental and technical analysis; finally, maintain discipline and avoid impulsive trading or herd mentality. Only then can you steadily profit from your odd lot investments.