A Complete Guide to Odd Lot Trading: Timing of Stock Sales, Trading Costs, and Advanced Techniques

The threshold for small investors entering the stock market is decreasing year by year, and odd-lot trading has become a gateway for many novice investors. However, most people still have limited understanding of how odd-lot trading works, the best timing for selling stocks, trading time restrictions, and fee structures. This article will answer these core questions one by one.

What is an odd lot? Why does it occur?

Odd lots refer to stocks less than 1,000 shares (1 trading unit). The minimum trading unit for full lots is 1 trading unit (1,000 shares), but investors may hold odd lots due to unfilled orders, stock distribution, or other reasons, starting from 1 share.

Odd lots typically form from the following situations: rapid stock price fluctuations causing partial unfilled orders; dividends or rights issues resulting in odd lots; or residual shares after dividend distribution.

Complete analysis of odd-lot trading hours: seize the golden window for selling

Before October 26, 2020, odd-lot trading was only available after market hours, and the time and trading volume could not meet the needs of many investors. After reform, odd-lot trading expanded to during-market hours, giving investors more flexibility when selling stocks.

Key tip: During market hours, orders can only be placed through brokerage trading platforms; unfilled orders during market hours will not automatically carry over to after-hours and need to be resubmitted; unfilled after-hours orders will be automatically canceled and will not carry over to the next trading day.

Special regulations for odd-lot trading

Odd lots can receive dividends and rights

Holders of odd lots enjoy shareholder rights, and their holdings can participate in dividends and rights issues. During dividend distribution, fractional shares less than 1 share will be paid out in cash or sold collectively, with proceeds distributed to odd-lot shareholders.

Odd-lot trading units and minimum purchase threshold

The minimum trading unit is 1 share, allowing purchase of 1 to 999 shares. In theory, you can buy odd lots with NT$1,000, but due to minimum fee standards, it is recommended to buy at least NT$10,000 worth of shares per transaction; otherwise, the fee ratio becomes relatively high.

You can sell odd lots easily

Taiwan Stock Exchange has officially incorporated odd-lot trading regulations. As investor demand diversifies, odd-lot trading is becoming more common, and the success rate of selling stocks has increased accordingly, making it especially suitable for small investors planning long-term positions.

Decoding odd-lot trading costs: how much are the fees?

The fee calculation for odd-lot trading is exactly the same as for full lots: Trade amount × 0.1425%

For example, purchasing 200 shares of TSMC (2330.TW, assuming closing price NT$1,065):

• Basic fee: 200 × 1,065 × 0.1425% = NT$303.53
• If the broker offers a 50% discount: NT$303.53 × 50% = NT$151.77

Comparison of mainstream broker fees

How to sell odd lots without getting stuck? Advanced trading tips

Although odd-lot trading has become more convenient, the trading volume for less popular stocks remains low. Many investors face difficulty executing trades and need to adopt strategic approaches.

Tip 1: Convert odd lots into full lots

If selling stocks in odd lots is difficult (e.g., setting a selling price too high, resulting in no takers), reverse the approach: buy enough odd lots to make a full lot, then sell through the more active full-lot market.

For example, if holding 700 shares of Shin Shin (1582.TW) but unable to sell smoothly, buy an additional 300 shares to make a full 1,000-share lot, and then sell via full-lot trading with higher liquidity.

Tip 2: Place after-hours limit orders at limit-up or limit-down prices

After-hours odd-lot trading only occurs once at 14:30 via batch auction, following the maximum trading volume principle. Therefore:

• To ensure buy-in: place a buy order at the limit-up price
• To sell quickly: place a sell order at the limit-down price

This can significantly increase the chances of execution.

Pros and cons of odd-lot investing

Advantages:

• Low capital threshold, starting from NT$1,000
• Suitable for dollar-cost averaging strategies
• Convenient for small investors to “test the waters” in the stock market
• Sufficient liquidity allows for other investments or daily expenses

Disadvantages:

• Lower liquidity, longer matching times
• Fixed fee rate, high proportion of costs for small trades
• Trading restrictions: odd lots can only be sold, not bought via order
• When selling stocks, all shares must be sold at once; partial sales are not allowed
• Converting odd lots into full lots has time limits; expired if not completed

Summary

Odd-lot trading has become an important tool for Taiwanese investors practicing small-scale wealth management. Compared to full lots, odd-lot trading has a lower entry barrier and greater flexibility in adjusting sell strategies. However, investors need to understand the trading mechanisms thoroughly, seize the best selling stock timing, carefully evaluate fee costs, and adapt strategies based on market liquidity.

Successful odd-lot investing requires not only stock selection skills but also understanding trading rules, controlling transaction costs, and maintaining rational decision-making. Only then can small investors truly achieve wealth growth in the stock market.