Unable to sell fractional shares during trading? Master trading rules and practical skills to easily execute transactions

Many small investors discover a big problem after buying fractional shares—they can’t sell them during trading hours. This isn’t an isolated case but a common dilemma in fractional share trading. Compared to active full-share trading, liquidity in fractional shares is significantly lower, especially for less popular stocks. To successfully offload your fractional shares, you first need to understand the root cause and then master the appropriate trading techniques.

Why is it so hard to sell fractional shares during trading hours?

Low trading volume is the main reason. Full-share trading involves many participants, with abundant buy and sell orders, making transactions relatively easy. However, the fractional share market has limited participants, especially for non-hot stocks, where buy and sell orders often go unfilled for long periods.

This situation is especially prominent during trading hours. Although since October 26, 2020, investors can trade fractional shares during the day, the trading volume still lags far behind after-hours markets. Many investors prefer to place orders during the after-hours auction, leading to weak actual trading activity for fractional shares during the day.

Additionally, some stocks are inherently illiquid; even full-share trading is sluggish, let alone fractional shares. If you hold fractional shares of such stocks, selling during trading hours becomes an unavoidable challenge.

Complete analysis of intraday trading rules and timing

To solve the problem of unsellable shares, you must first understand the trading rules.

Key times for intraday trading: Investors can submit fractional share orders via their broker’s platform starting at 9:00 AM. The first auction occurs at 9:10 AM, followed by continuous auctions every minute until 1:30 PM. During this process, transactions follow the principles of “price priority, then time priority at the same price.”

After-hours trading as a backup: If trades don’t execute during the day, orders are not automatically carried over to after-hours. Investors must resubmit orders between 1:40 PM and 2:30 PM, either electronically or via phone. There is only one auction during after-hours at 2:30 PM; unfilled orders are automatically canceled and do not carry over to the next day.

Practical tips to improve fractional share sell-through

For the issue of not being able to sell during trading hours, investors can adopt several effective strategies.

Tip 1: Convert fractional shares into full shares to boost liquidity. For example, if you hold 700 shares of a non-hot stock and can’t find a buyer during the day, consider buying an additional 300 shares to make a full 1,000-share lot (one standard board lot). Then, sell the full lot through the more liquid full-share market. Although this incurs an extra transaction fee, it ensures a quick sale and may be more cost-effective overall.

Tip 2: Use extreme prices to secure a sale. During after-hours trading, since there’s only one auction, instead of gambling on whether someone will buy, take the initiative—list your shares at the limit down price. According to the auction’s “maximum transaction principle,” listing at the limit down significantly increases the chance of execution. While the selling price may be less than ideal, it guarantees the sale.

Tip 3: Test the waters with partial orders. If you prefer to minimize losses, you can try selling part of your fractional shares at your target price during the day. If there’s no response after a few minutes, lower the price and try again, or wait until after-hours to sell everything at the limit down price.

Tip 4: Choose active trading times. The period from 9:10 to 11:00 AM usually sees higher trading activity. If your stock remains untraded during this window, it indicates very low liquidity, and it might be better to wait until after-hours or the next day, or consider converting to a full lot.

Details on transaction costs and fees for fractional shares

Another consideration for unsellable fractional shares during trading hours is cost. Many investors are reluctant to hold fractional shares long-term due to potential losses and high fees.

The transaction fee for fractional shares is calculated the same as for full shares—0.1425% of the transaction amount. The key difference is the minimum fee setting. For example, selling 200 shares of TSMC at a price of NT$1,000 per share:

200 × 1,000 × 0.1425% = NT$285

Many brokers set a minimum fee of NT$1 and offer discounts for electronic orders. With a 50% discount, the fee becomes NT$142.50.

Fee rates vary significantly among brokers. Here are some major brokers’ minimum fees and online order discounts:

Choosing brokers with lower discount rates can effectively reduce the cost of holding fractional shares.

Pros and cons of fractional share investing

Before investing in fractional shares, it’s important to rationally assess their advantages and disadvantages.

Main benefits: Low capital threshold—start with NT$1,000; suitable for dollar-cost averaging; good for small-scale testing; dividends and shareholder rights are available.

Main limitations: Selling during trading hours is often difficult; liquidity is poor, especially for non-hot stocks; fee structures are complex, and small trades can lead to losses; fractional shares can only be sold, not bought, with time restrictions.

Moreover, attempting to “convert zero to full” to improve liquidity requires additional capital, increasing risk exposure.

Exploring other small-investment options

If you’re tired of not being able to sell fractional shares during trading hours, there are alternative small-investment avenues.

Contracts for Difference (CFD) are financial derivatives that track price movements without owning the actual stock. The main advantages are leverage and low capital requirements. For example, buying 5 shares of Google directly costs around US$2,000, but with CFDs, you might only need to deposit 5% margin—just US$100 total.

CFDs typically have no commission, only spread costs, and offer higher liquidity than fractional shares. However, CFDs are more suitable for short-term trading; holding positions overnight incurs overnight interest, which is contrary to the long-term nature of fractional investing.

Conclusion: Recognize the reality of fractional share trading

While fractional shares open the door for small investors, the reality of difficulty selling during trading hours reminds us that not all small-scale stock investments are worthwhile. Before purchasing fractional shares, evaluate the stock’s liquidity; if it remains unsellable for a long time, consider “converting zero to full” or alternative options like CFDs, rather than waiting blindly.

Mastering trading rules, understanding fee structures, and applying practical techniques are key to thriving in the fractional share market. Ultimately, high liquidity and trading activity often mean the stock is popular; choosing hot stocks for fractional trading is the simplest way to reduce the risk of “unsellable” shares.