How to Better Sell Fractional Shares — A Complete Guide to Trading Hours, Strategies, and Costs

Many small investors are starting to enter the stock market, but they face a practical problem: how to sell their fractional shares? As Taiwan’s fractional share trading system becomes more完善, understanding how to sell fractional shares has become an essential lesson for every novice investor. This article will deeply analyze the core mechanisms of selling fractional shares, the best strategies, and those hidden costs often overlooked.

Why Are Fractional Shares Difficult to Sell? The Real Pain Points for Small Investors

Trading fractional shares sounds very convenient, but in reality, many investors have encountered the same problem: placing an order but unable to execute it for a long time. This is not an isolated case but a common phenomenon in the fractional share market.

The minimum trading unit for full shares is one lot (1,000 shares), while fractional shares refer to stocks less than 1,000 shares, with a minimum of 1 share. Fractional shares often arise when a trade is not fully executed, for example, due to rapid stock price fluctuations or insufficient trading volume.

Why are fractional shares hard to sell? There are two main reasons: First, not all stocks are suitable for fractional trading. Popular stocks (like TSMC) have relatively active fractional trading, but small-cap or less popular stocks have weak buying interest, making transactions much harder. Second, each order for fractional shares cannot exceed 999 shares, limiting large capital entry and affecting liquidity.

For example, if you hold 700 shares of Shin-Kin (1582.TW) and want to sell, since Shin-Kin is not a hot stock, you might place an order during trading hours but find no takers. You may be forced to wait until after hours to re-order, or even need multiple trading days to successfully sell.

During Trading Hours vs After Hours: Choosing the Right Time Is the First Step to Successful Selling

On October 26, 2020, Taiwan’s fractional share trading system underwent a major reform. Investors are no longer limited to after-hours trading but can buy and sell fractional shares during regular trading hours. Understanding the differences between these two periods is the key to how to sell fractional shares.

Trading hours (09:00-13:30)

• Order placement: Must use electronic orders (via broker app or website)
• Execution method: First matching at 09:10, then every minute via call auction
• Order priority: Price priority, then time priority at the same price

Advantages: More trading opportunities and higher chances of execution.
Note: Unfilled orders during trading hours do not automatically carry over to after-hours trading; you need to re-place the order.

After-hours trading (13:40-14:30)

• Order placement: Via electronic orders or by calling broker customer service
• Execution method: Only once at 14:30 via call auction
• Order priority: Price priority, then random order at the same price

Advantages: Only one chance to execute. If your order isn’t filled during the 14:30 auction, it will be canceled automatically and won’t carry over to the next day. You need to re-enter the order on the next trading day.

Timing strategy: For hot stocks, trading during market hours usually has a higher success rate; for less popular stocks, prepare both during and after hours to increase chances.

How to Sell Fractional Shares Smoothly? Three Practical Tips

Tip 1: Convert Fractional to Whole Shares

Applicable when: Your fractional shares are close to a whole lot, and the stock’s fractional trading volume is thin.

Suppose you hold 700 shares of Shin-Kin, and the fractional market shows many unfilled sell orders. You can adopt the “convert fractional to whole” strategy: buy 300 shares to make a total of 1,000 shares (one lot), then sell this lot in the more liquid full-share market.

Advantages: Full shares have much higher liquidity, faster execution, and better prices.
Disadvantages: Requires extra capital to buy the additional 300 shares and may incur extra fees. Suitable for investors with sufficient funds who need quick liquidity.

Tip 2: Buy at Limit Up, Sell at Limit Down

This is a strategy specific to after-hours trading. Since after-hours only involves one call auction, execution follows the “maximum transaction principle” (prioritizing orders with the highest volume).

For selling: Place a limit order at the limit-down price. Under the maximum transaction principle, the lowest-priced sell order (at the limit-down price) is most likely to be executed first.

Note: Not all stocks have a limit-down, and some may not reach the theoretical limit-down price. This strategy is suitable for investors who prioritize quick exit over price perfection.

Tip 3: Spread Orders Over Multiple Days

If your order isn’t filled on a single day, don’t be discouraged. Re-enter orders during the next trading session—both during market hours and after hours—as market conditions and participant interest change daily, increasing the chance of execution.

Rules and System Design of Fractional Share Trading

Understanding the system features helps you plan your selling strategy more scientifically.

Fractional shares support dividends and shareholder rights: Holders of fractional shares are entitled to dividends and other shareholder benefits. Any fractional part less than one share can be converted into cash dividends or sold collectively, with proceeds distributed among fractional shareholders.

Trading units: The minimum trading unit is 1 share, and transactions must be in multiples of 1 share. In practice, due to transaction costs, it’s recommended to buy at least NT$10,000 worth of shares per transaction to avoid high fees eating into returns.

Fractional shares can be sold: The Taiwan Stock Exchange explicitly recognizes the legality of buying and selling fractional shares and supports after-hours trading. As investor demand grows, fractional trading becomes more popular and easier to sell, especially for small investors.

Comparing Transaction Costs: Fees, Liquidity, and Hidden Costs

Many focus only on the low entry barrier of fractional trading but overlook hidden costs. Here’s a comprehensive breakdown.

Explicit costs: Commission fees

Fees are calculated as 0.1425% of the transaction amount, similar to full shares. Some brokers set a minimum fee (usually NT$1) and offer discounts for online orders.

Example: Buying 200 shares of TSMC at NT$1,065 per share:

• Basic fee = 200 × 1,065 × 0.1425% ≈ NT$303.53
• With 50% online order discount: NT$151.77

Mainstream broker comparison:

Hidden costs: Liquidity loss

Even with low fees, poor liquidity can cause larger losses. Selling thinly traded or unpopular stocks’ fractional shares may force you to lower your price to find a buyer, resulting in a bigger “spread loss” than the transaction fee. Multiple orders and waiting time also add to costs.

Small Investors’ Investment Options: Fractional Shares vs CFDs vs Dollar-Cost Averaging

Besides traditional fractional trading, small investors can consider other options:

Fractional Shares

• Pros: Physical shares, dividends, long-term holding, sense of ownership
• Cons: Poor liquidity, hidden costs, difficulty selling, fees can eat profits
• Suitable for: Investors confident in specific companies and willing to hold long-term

Contracts for Difference (CFDs)

• Mechanism: Trade price differences without owning the actual stock, requiring only a small margin
• Example: Buying 5 shares of Google—full cost around $2,000; CFD margin might be only $100 (5%)
• Pros: Very low entry, no extra commissions, high liquidity, good for short-term trading
• Cons: Daily settlement, overnight interest, higher risk
• Suitable for: Short-term traders, those sensitive to price swings

Dollar-Cost Averaging (DCA)

• Mechanism: Invest a fixed amount monthly in a stock, via fractional or full shares
• Pros: Cost averaging, disciplined investing, reduces emotional bias
• Cons: Long-term commitment, less flexibility, still faces liquidity issues
• Suitable for: Steady-income small investors

Practical Tips: Checklist for Beginners Selling Fractional Shares

1. Check if the stock is actively traded before selling; plan exit timing for less active stocks.
2. Choose the right timing: Prioritize market hours for hot stocks; prepare both during and after hours for less popular stocks.
3. Monitor execution status: If unfilled after two days, consider “convert fractional to whole” or adjust your price.
4. Calculate actual costs: Consider not only fees but also liquidity loss.
5. Set stop-loss mechanisms: If prices keep falling and you can’t sell, avoid passive waiting.

Summary

How to sell fractional shares isn’t a single answer. With Taiwan’s increasingly完善 fractional trading system, small investors have more opportunities, but also new challenges—how to sell efficiently.

Mastering the differences between market and after-hours trading, learning practical techniques like “convert fractional to whole,” and thoroughly evaluating hidden costs are the three keys to successful fractional share selling. Instead of blindly chasing fractional trading, understand your risk tolerance and investment horizon, and choose the most suitable trading tools.

Finally, remember: fractional shares are best suited for long-term holding. Short-term traders might consider more liquid instruments like CFDs. Whichever method you choose, rational investing and avoiding herd mentality are the fundamental principles for small investors to build稳健 wealth.