Complete Guide to Selling Fractional Shares: Master Timing, Fees, and Practical Tips Every Small Investor Must Know

In recent years, among the investment boom of small investors, odd lot selling has become a key issue for many traders. Rather than focusing on how good odd lots are to sell, it’s more important to first understand the trading mechanisms, cost structures, and selling techniques to truly achieve effective sales. Today, we’ve compiled a complete guide to odd lot trading, including trading time windows, fee calculations, and practical methods to increase the chances of successful transactions.

Basic Knowledge of Odd Lots: Why Understand Odd Lot Selling

What are odd lots?

The minimum unit for whole share trading is 1 lot (1000 shares), but investors often hold fewer than 1000 shares, which are called odd lots. The smallest trading unit for odd lots is 1 share, with a maximum order size of 999 shares per transaction.

The main reasons for odd lots are threefold: first, incomplete execution of buy/sell orders leading to remaining shares; second, market volatility causing transaction volumes to fall short of expectations; and third, scattered shares resulting from company rights issues or dividends.

Why should you understand odd lot selling?

Before October 26, 2020, odd lots could only be traded after hours, with limited volume and narrow time windows. After reforms, investors can trade odd lots during market hours, but whether they can sell smoothly still depends on mastering the right timing and techniques. Especially for less popular stocks, liquidity for odd lots is poor, requiring investors to actively adopt strategies to improve the probability of successful transactions.

Trading Hours and Rules for Odd Lot Selling

Intraday odd lot trading period

During market hours, from 9:00 AM, odd lot buy/sell orders are accepted, but the first matching occurs at 9:10 AM. After that, every minute, a batch auction matching is conducted. Trading continues until 1:30 PM. Investors can only place orders via electronic trading platforms (broker platforms), not by phone manual orders.

Order matching follows the principle of “price priority, then submission time priority at the same price.” Important reminder: unfilled orders during the day are not automatically carried over to after-hours; investors need to resubmit.

After-hours odd lot trading period

After-hours trading opens at 1:40 PM and closes at 2:30 PM. During this time, orders can be placed via electronic or phone (manual) channels. At 2:30 PM, a single batch auction is conducted. Orders that do not match are automatically invalidated and will not carry over to the next day.

After-hours matching follows the “maximum transaction volume” principle, with order priority based on “price priority, then random order at the same price,” differing from intraday time-based sorting.

Cost Considerations for Odd Lot Selling: How to Calculate Fees

Standard fee calculation

The transaction fee for odd lots is the same as for whole shares, at 0.1425% of the transaction amount. For example, selling 200 shares of TSMC (closing price 1065 NT$):

200 shares × 1065 NT$ × 0.1425% = 303.53 NT$

Different brokers offer various discounts. Suppose a broker offers a 50% discount; the actual fee becomes: 303.53 NT$ × 50% = 151.77 NT$.

Comparison of major brokers’ fees

Different brokers have varying fee discounts for odd lot trading. Fubon Securities and E.SUN Securities offer the lowest fee of 1 NT$, with electronic order discounts of 18% and 20%, respectively; Uni-President Securities offers a 1.68% discount; KGI Securities requires proof of financial strength but offers a 60% discount; Shin Kong Securities provides the lowest at 10%.

Controlling costs

The minimum fee for odd lot trading is usually 20 NT$. Therefore, the smaller the transaction amount, the higher the fee proportion, which can significantly eat into profits. It’s recommended that each transaction be at least 10,000 NT$ to effectively control fee costs and avoid losing profits to fees.

Practical Tips to Increase the Success Rate of Odd Lot Selling

Tip 1: Convert odd lots into whole lots to speed up transactions

For less popular stocks with poor odd lot liquidity, intraday transactions may not execute. For example, if holding 700 shares of Shin-Kin (1582.TW), investors can buy an additional 300 shares to reach 1000 shares (one lot), then sell the whole lot in the more liquid regular trading market. This approach not only speeds up the sale but also avoids repeatedly placing and canceling odd lot orders.

Tip 2: Use batch auction principles to set precise order prices

After-hours trading conducts only one matching based on maximum volume. If you want to sell odd lots quickly, consider placing a sell order at the limit down price to increase the chance of execution during this single auction. Conversely, to buy specific odd lots, try placing an order at the limit up price.

Tip 3: Analyze market liquidity to choose optimal timing

Observe intraday odd lot market data. If the target stock has strong buy orders, actively place sell orders during market hours; if buy orders are sparse, wait for after-hours trading. Some investors submit new orders the next day if they don’t execute during the day, spreading out orders to improve chances.

Tip 4: Prioritize selling popular stocks

Hot stocks like TSMC and MediaTek have relatively high odd lot liquidity, making it easier to sell without difficulty. In contrast, less popular stocks often require longer waiting times or more aggressive pricing strategies.

Pros and Cons of Odd Lot Selling

Advantages

Odd lot trading significantly lowers the entry barrier, allowing small investors to participate in the stock market without large capital. This flexibility is especially suitable for “test water” investors, who can start with small amounts to familiarize themselves with the market and gain experience before increasing investments. Odd lots are also useful for dollar-cost averaging and participating in dividends and rights issues over the long term.

Risks and disadvantages

The main drawback is that liquidity is much lower than for whole shares, leading to longer matching times, especially for less popular stocks. Although the fee rate is the same, the minimum fee rule makes the cost burden relatively higher for small transactions. Investors lacking patience or not paying attention to costs may suffer losses.

Additionally, odd lot trading has certain restrictions: investors can only sell shares they already hold; they cannot place buy orders to complete a whole lot later. Converting odd lots into whole shares has time limits, and orders expire if not completed within the period. When brokers have insufficient odd lot inventory, investors may also be unable to buy the desired amount.

Beyond Odd Lot Selling: Other Small Investor Trading Options

If concerns about liquidity and fee costs persist, investors can consider Contract for Difference (CFD) as an alternative. CFDs are financial derivatives that allow trading on the price difference without owning the actual stock.

Advantages of CFDs

Only a small margin deposit is needed to enter, much lower than for odd lots. For example, buying 5 shares of Google at $400 each costs $2000; with CFDs, a 5% margin requirement means only $100 is needed. Most platforms do not charge additional commissions, only spreads, making costs transparent and avoiding liquidity issues.

Suitable investors and timeframes

Odd lots are suitable for long-term investors who want to hold and participate in dividends. CFDs are more appropriate for short-term traders, as they settle daily and may incur overnight interest if positions are held overnight. Investors should choose based on their investment horizon and risk appetite.

Conclusion

As odd lot trading rules continue to improve, odd lot selling has become an important investment tool for small investors in Taiwan. Mastering intraday and after-hours trading windows, understanding fee calculations, and learning techniques like converting odd lots into whole lots can greatly enhance transaction success.

However, successful odd lot investing requires investors to have sufficient knowledge. They should first assess their risk tolerance, select targets and strategies aligned with their investment horizon, learn basic technical and fundamental analysis, and most importantly, stay rational, avoiding herd mentality and impulsive trades. Through systematic learning and practice, even with limited capital, investors can find opportunities in the odd lot market.