How to place orders for intraday fractional shares: The complete trading guide every beginner must know

Fractional share trading has become an important tool for small investors in Taiwan to participate in investment and wealth management. Many investors want to engage in the stock market with small amounts of capital but feel confused about how to place orders for intraday fractional shares, trading hours, and fee structures. This article will start from basic concepts and gradually explain the key practical points of fractional share trading.

Understanding the Basic Definition of Fractional Shares

The basic unit of stock trading is a “lot,” which equals 1,000 shares. When an investor holds less than 1,000 shares of a stock, this portion is called a fractional share, with the minimum trading unit being 1 share.

Fractional shares are usually generated when stock buy or sell orders are only partially filled. For example, if an investor places an order to buy 800 shares, but due to market fluctuations only 500 shares are executed, the remaining 300 shares become fractional shares. Additionally, fractional shares can also result from stock dividends or rights issues.

Trading of fractional shares refers to transactions specifically targeting these scattered shares. Each order cannot exceed 999 shares, which is a mechanism for trading “stock leftovers.”

How to Place Orders for Intraday Fractional Shares: Trading Hours and Rules Analysis

Trading Session Divisions

Taiwan’s fractional share trading is divided into two periods: intraday trading and after-hours trading:

Intraday fractional share orders (09:00-13:30)

Investors can start placing fractional share orders from 9:00 AM. Orders during this period must be placed via electronic trading platforms, i.e., logging into the broker’s trading system. The system will perform the first matching at 9:10 AM, followed by a collection of bids every minute using a call auction method. The order execution follows the principles of “price priority, time priority”—at the same price, earlier submitted orders are executed first.

Placing orders during the intraday period is straightforward: on the broker app’s order page, switch to “Fractional Share Trading” mode, and when entering the quantity, the unit changes from “lots” to a number between 0 and 999 shares. For example, to buy 200 shares of TSMC, simply input “200.”

After-hours fractional share orders (13:40-14:30)

During after-hours trading, investors have more flexibility. Orders can be placed via electronic trading or by calling the broker’s customer service for manual orders. At 2:30 PM, the exchange performs a single collection of bids through a call auction. Unfilled orders are automatically canceled and will not carry over to the next day.

Important Trading Regulations

Unfilled orders are not automatically retained

If a fractional share order during intraday trading is not fully filled, that unfilled portion will not automatically transfer to after-hours trading. Investors must resubmit orders during after-hours or the next intraday session. For example, if a sell order for 700 shares at 9:30 AM is not filled, the investor needs to place a new order after 1:40 PM.

Fractional shares can receive dividends and participate in rights issues

Holders of fractional shares enjoy the same rights as full shareholders, including receiving dividends and participating in rights issues. When dividends are paid, fractional shares less than one share will be converted into cash or sold centrally by the exchange, with proceeds distributed to fractional shareholders.

Trading units and minimum investment amounts

The minimum trading unit for fractional shares is 1 share, theoretically allowing participation with as little as NT$1,000. However, considering transaction fees, it is generally recommended to invest at least NT$10,000 per transaction for cost efficiency.

Cost Analysis of Intraday Fractional Share Orders: Fee Structure

Fee Calculation Method

The fee calculation for fractional and full shares is the same, at 0.1425% of the transaction amount. For example, if buying 200 shares at NT$1,065 per share:

200 shares × NT$1,065 × 0.1425% = NT$303.53

Minimum Fees and Discount Promotions

Most brokers set a minimum fee, usually starting at NT$1. Additionally, electronic orders often qualify for discounts, which vary significantly among brokers—from 10% to 60% off.

Using the above example, if enjoying a 50% discount for electronic orders, the actual fee payable would be:

NT$303.53 × 50% = NT$151.77

Impact of Fees on Investment Returns

Transaction fees are an invisible cost in fractional share investing. Investors should carefully calculate to avoid excessive fees from frequent small transactions. If the investment amount is too small, the fee proportion can significantly impact overall returns.

Practical Tips to Make Intraday Fractional Share Orders More Likely to Execute

Choose Stocks with Better Liquidity

Not all stocks’ fractional shares are easy to trade. Popular stocks (like TSMC, MediaTek) have ample trading volume, making orders easier to fill. Conversely, less popular stocks have lower fractional trading volume, which may require more time to execute.

Strategies to Convert Fractions into Whole Shares

For difficult-to-sell fractional shares, investors can adopt a “convert fractions into whole shares” strategy. For example, if holding 700 shares of a low-liquidity stock and wanting to sell, buy an additional 300 shares to reach 1,000 shares (one lot), then sell the full lot in active trading, greatly increasing the chance of quick execution.

Understand the Characteristics of After-hours Call Auction

After-hours trading involves only one call auction. If an investor urgently wants to buy, they can place a bid at the limit-up price; if they want to sell quickly, they can bid at the limit-down price. According to the maximum transaction principle, this approach can significantly improve the likelihood of execution.

Spread Orders Over Time

If a particular stock’s fractional shares do not execute during the day, investors can resubmit orders during the next trading day or attempt a second order after hours, increasing the chances of a successful trade.

Pros and Cons of Fractional Share Investment

Advantages

Low Capital Threshold

The biggest advantage of fractional share trading is lowering the barrier to entry. Small amounts of capital can participate in the stock market, suitable for investors with limited financial resources. Investors can maintain sufficient liquidity for daily expenses or other investment opportunities.

Flexible Regular Investment

Fractional share trading is suitable for dollar-cost averaging strategies. Investors do not need to invest large sums at once and can gradually build their positions based on their financial situation.

Disadvantages and Risks

Lower Liquidity

Fractional share trading volume is much lower than full shares, and matching orders may take longer. Some less popular stocks’ fractional shares may remain untraded all day, requiring patience from investors.

Higher Transaction Costs

Besides basic fees, fractional share trading may involve minimum fees and other service charges, making the overall cost higher compared to full shares. When investing very small amounts, the proportion of fees can become unreasonable.

Limited Trading Processes

Fractional shares can only be sold; buying is only possible through existing fractional shares or partial fills. Additionally, converting fractional shares into full shares has time limits; if overdue, the operation becomes invalid.

Investment Suggestions for Small Investors in Fractional Shares

For small investors, intraday fractional share orders are practical due to their ease of operation and simplified procedures. However, before investing, they should prepare as follows:

Understand Your Risk Tolerance, choose suitable stocks and strategies, and avoid blindly following trends.

Learn Basic Investment Analysis Skills, such as reading financial statements and industry trend judgment, to make rational decisions.

Control Trading Frequency and Amounts, to prevent fees from eroding returns. Keep individual transaction amounts within reasonable limits.

Maintain Rationality and Patience, as intraday orders may take time to execute. Investors should be psychologically prepared. Long-term persistence rather than short-term chasing is the correct mindset for fractional share investing.

As Taiwan’s capital market develops, the fractional share trading mechanism continues to improve and has become an important way for many small investors to participate in the stock market. Mastering the correct order placement methods during intraday trading, understanding fee structures, and applying practical techniques will enable investors to allocate funds more efficiently in the fractional share market.