Essential Guide for Small Investors | Complete Strategy for Intraday Trading of Fractional Shares: Timing, Fees, and Selling Tips All in One

Why Should You Pay Attention to Intraday Micro-Share Trading?

In recent years, Taiwan’s stock market has seen a surge of a “small investment” trend, and micro-share trading has become a stepping stone for many investors with limited funds to enter the market. However, many people are unaware that since October 26, 2020, micro-share trading has already broken the previous “after-hours only” restriction. Investors can now buy and sell micro-shares during the intraday trading session, which has changed the entire game.

What Are Micro-Shares? Why Do They Exist?

The normal trading unit for stocks is “one lot” (1000 shares), but sometimes investors hold less than 1000 shares of scattered stocks, which are called micro-shares. The minimum trading unit for micro-shares is 1 share.

How do micro-shares usually come about? Mainly for a few reasons: unfilled orders, rapid stock price fluctuations leading to lower-than-expected trading volume, or during the process of allotments and dividends. Simply put, micro-share trading is a trading method specifically for these scattered stocks, with each order not exceeding 999 shares.

Key Rules for Intraday Micro-Share Trading

Intraday Trading Session (New Option)

Previously, micro-shares could only be traded after hours, which troubled many investors wanting to enter the market immediately. Now, this has changed.

Intraday micro-share trading hours: 9:00 AM to 1:30 PM

• Orders can only be placed via electronic trading (broker app or website)
• The exchange conducts the first matching at 9:10 AM, followed by continuous matching every 1 minute using call auction
• Transaction priority: price first, then submission time at the same price

What does this mean? Investors can now submit micro-share orders right at the market open at 9:00 AM, just like trading full shares, without waiting until the afternoon. However, note that unfilled orders during the session will not automatically carry over to after-hours trading; they need to be re-entered after the session.

After-hours Trading (Existing Option)

From 1:40 PM to 2:30 PM, investors can place orders via electronic trading, phone, or manual methods. The exchange conducts a single call auction matching at 2:30 PM. Unfilled orders are automatically canceled and will not carry over to the next day.

How Are Micro-Share Trading Fees Calculated?

The fee calculation for micro-shares is exactly the same as for full shares, at 0.1425% of the buy or sell amount.

Example: Buying 200 shares of TSMC (assuming closing price of 1065 NT$)

• Basic fee = 200 × 1065 × 0.1425% ≈ 303.53 NT$

However, brokerages may set a minimum fee for micro-shares (usually starting from 1 NT$) and offer discounts for electronic orders (about 10% to 60% off). If a broker offers a 50% discount, the actual fee for the above example would be approximately 151.77 NT$.

Suggestion: It’s best to keep each transaction above 10,000 NT$, as otherwise, the fee ratio can be quite high, making small trades less cost-effective.

Tips for Selling Micro-Shares More Easily

Advantages of Intraday Trading

Compared to after-hours trading, the intraday trading session offers more matching opportunities. If you hold popular stocks, they are usually easier to sell during the day. For less traded stocks, investors might need to diversify orders or try again after hours.

Strategies to Convert Small Lots into Whole Lots

Suppose you want to sell 700 shares of a less popular stock, but it’s cold during the day. You can consider “converting small lots into whole lots”: first buy 300 shares to make a 1000-share lot, then sell the more actively traded full lot. Although this incurs an extra buy fee, it ensures the trade goes through, especially useful if you need to exit quickly.

Use Limit Orders at Limit Up/Down Prices

Since after-hours trading only matches once, strategies need adjustment:

• To ensure buying: place a limit order at the limit-up price, prioritizing maximum execution
• To ensure selling: place a limit order at the limit-down price, increasing the chance of execution

This trick is especially effective for less popular stocks.

Advantages and Limitations of Micro-Share Trading

Advantages:

• Low capital requirement, starting from 1 share, suitable for dollar-cost averaging
• Allows small-scale “testing waters” to reduce risk
• Micro-shares can also receive dividends and participate in stock rights

Limitations:

• Liquidity is relatively lower, and execution may take longer
• Fees can be relatively high for small amounts, so caution is needed
• Only sell orders can be placed; buy orders are not available
• Converting micro-shares into full shares has a time limit and may expire

Investment Tips for Small Investors

Before trading micro-shares, investors should assess their risk tolerance. Make full use of the new intraday trading rules, choosing appropriate order times based on stock popularity. For hot stocks, intraday orders are more efficient; for less popular stocks, combining after-hours trading can improve success rates. Also, avoid frequent small trades just to save on fees; it’s better to accumulate sufficient funds and place larger orders to truly enjoy the convenience of micro-share investing.

With the introduction of intraday micro-share trading rules, Taiwan’s small-investment environment is becoming more friendly. However, investors still need basic knowledge, maintain rational judgment, and aim for steady profits in the micro-share market.