How much does one stock cost? How is one share calculated? Comparison of trading costs between Taiwan stocks and US stocks

Must-Read Before Buying Stocks: Why Are the Prices of Taiwan Stocks and US Stocks So Different?

Many novice investors are confused. Why does it seem that US stocks are so cheap, with just a few tens of dollars to buy one share, while Taiwan stocks often cost hundreds of dollars for a single share? The simple reason behind this is—different trading units.

Taiwan stocks and US stocks operate under completely different trading systems. US stocks are traded in “one share” units, while Taiwan stocks are based on “one lot,” with one lot equal to 1000 shares. This difference directly results in vastly different entry barriers in the two markets.

How Much Does One Lot of Stock Cost? Understanding How to Read Stock Prices

To understand the cost of one lot of stock, first, you need to know what the stock price is. The stock price is the transaction price of one share in the market, determined by supply and demand between buyers and sellers, and it fluctuates constantly with trading.

For example, take TSMC. Suppose at a certain moment, TSMC’s stock price is NT$561. This means the market price for one share is NT$561. Note that the face value (usually NT$10) of the stock has little relation to the stock price; the face value is just a historical record. The actual investment cost is determined by the current market price.

Tesla (TSLA) is also a good example. On January 6, 2023, one share of Tesla was $101.81; by August 2, one share had risen to $254.11. In just seven months, the investment cost for the same share increased by 150%. This demonstrates the power of stock price fluctuations.

How Much Does One Lot of Stock Cost? The Calculation Method in Taiwan

Now that you know how much one share costs, calculating one lot is straightforward. 1 lot = 1000 shares, so the price of one lot = stock price per share × 1000.

Using TSMC as an example, with a stock price of NT$561:

• One lot of TSMC = NT$561 × 1000 = NT$561,000

Imagine, a retail investor needs NT$560,000 to buy one lot of TSMC. For most people, this is a significant financial burden. This is also why Taiwan introduced the “odd lot trading” system—allowing investors to buy 1-999 shares, lowering the entry barrier.

US Stocks vs. Taiwan Stocks: Differences in Trading Units and Costs

The same company listed in both markets has completely different investment costs. TSMC is the best example:

• Taiwan Stock (Code 2330): Stock price NT$561, buying one lot costs NT$561,000
• US Stock (Code TSM): Stock price $95, buying one share costs only $95 (about NT$3,000)

This explains why US stocks seem so cheap. Essentially, US stocks are traded in units of one share, while Taiwan stocks are traded in lots of 1000 shares, leading to much higher full-share transaction thresholds in Taiwan.

Other differences include:

• Trading hours: US stocks 21:30-4:00 (Daylight Saving Time), Taiwan stocks 9:00-13:30
• Price fluctuation limits: None in US stocks, none in Taiwan stocks
• Transaction fees: Usually 0 in US stocks, about 0.1425% in Taiwan stocks
• Minimum trading units: 1 share in US stocks, 1 lot (or via odd lot) in Taiwan stocks

What Determines the Price of a Single Share?

After understanding the calculation, investors also need to know: Where does the stock price come from?

Company Fundamentals

Companies with strong performance and profitability tend to have higher stock prices. Investors judge based on financial statements, profitability, and growth prospects. Good companies attract buying interest, pushing the stock price up.

Macroeconomic Factors

GDP, interest rates, inflation, and overall economic conditions also influence stock prices. When the economy is good, the stock market tends to rise; during recessions, it tends to fall.

Market Sentiment

Investor psychology and expectations are very important. Good news and favorable policies boost optimism and drive prices higher; bad news, political turmoil, or pandemics can cause panic and lead to declines.

Taiwan Stock Odd Lot Trading vs. Full Lot Trading

Because the cost of one lot is high, retail investors in Taiwan usually have two options:

Full lot trading (1 lot = 1000 shares): Good liquidity, quick transactions, but high capital requirement. Trading hours are during market hours 9:00-13:30 and after-hours 14:00-14:30.

Odd lot trading (1-999 shares): Lower capital requirement, suitable for small investments, but less liquidity, and transactions may be slower. Trading hours are during market hours 9:00-13:30 and after-hours 13:40-14:30, with a call auction system that matches orders every minute.

In simple terms, if you have sufficient funds, prioritize full lot trading; if your capital is limited, consider odd lot trading but accept the possible slower transaction speed.

Once you understand these basics, you can plan your trading strategies more rationally.