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Odd lot trading is all about buying and selling smaller amounts of stock that don’t add up to a full trading unit (usually 1,000 shares). So, instead of needing a lot of money to buy a full unit at once, you can start with a smaller amount of shares. This is super handy for anyone with a limited budget who still wants to get into stock investing!
Picture this: you’ve got your eye on a company’s stock, but the cost of a full trading unit is just too high. That’s where odd-lot trading comes in! You can kick things off by buying just a few shares and then add more as you save up. This approach not only lowers the entry cost but also gives you more flexibility to spread out your investment risk.
In a nutshell, odd-lot trading makes investing easier and more flexible, so you can get in the game no matter how much money you have and start putting your cash to work!
Investors can trade using various platforms offered by major brokerage firms in Taiwan. Transactions can be conducted directly through online platforms and mobile apps.
Based on the timing of transactions, odd-lot trading is divided into intraday and after-hours trading:
In terms of order of execution, whether during intraday or after-hours trading, “price priority” is the key rule. However, when prices are the same, intraday trading is determined by time—whoever’s order is placed first wins! In contrast, after-hours trading is different; the order of transactions is randomly determined by a computer, giving everyone a fair chance without having to race against the clock!
Transaction fees are like a tiny leak in a piggy bank, slowly draining your cash. If you’re not careful, these fees can quietly eat into your profits like pesky bugs! So, how do transaction fees work for odd-lot trading in Taiwan’s stock market?
Well, it’s pretty much the same as for regular lot trading! You still have to pay a 0.1425% transaction fee and a 0.3% securities transaction tax. But because odd-lot trades usually involve smaller amounts, most brokerages set a minimum transaction fee of NT$20 per trade.
Here’s an easy formula to remember:
Since 20 ÷ 0.1425% = 14,035.09, if your transaction is less than NT$14,036, you’ll be charged the minimum fee of NT$20. If you often invest around NT$5,000 or NT$10,000 and are worried about fees, it might be worth finding a brokerage that offers lower fees for regular investments.
In the early days, odd lot trading was only available after market hours. However, on October 26, 2020, the securities market introduced odd-lot trading during market hours, which was a significant event that revitalized the investment market! This not only lowered the investment threshold but also made the market more active and flexible. It reduced trade matching times and made market information disclosure more immediate, allowing everyone to seize investment opportunities more quickly and accurately. TEJ has summarized the impact of introducing odd-lot trading during market hours into three key points:
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Do you find yourself unsure where to start when looking for detailed information on odd lot trading? Don’t worry—TEJ has got you covered! Just log in to TEJ PRO and select “Listed (OTC) Odd Lot Trading Data (Daily)” in the stock price database, and you’ll easily access all the relevant information. The data is updated before 10 PM every night and includes a period condition search function, making it even easier for you to filter the trading information you need!
In summary, odd lot trading offers great convenience and flexibility, especially for investors with limited funds who want to participate in the stock market. This new trading method has introduced regular investment options, such as fixed amounts and variable amounts, allowing investors to purchase a set number of shares with smaller amounts of capital. It lowers the barrier to entry in the stock market and helps in diversifying investment risks more flexibly.
This trading method differs somewhat from traditional whole-share trading, such as restrictions on margin trading and different execution times. There is also room for improvement in information disclosure, which helps reduce information asymmetry over time.
Overall, odd lot trading provides significant advantages in both capital efficiency and risk management for investors.
TEJ not only organizes high-quality historical and current data on odd lot trading but also offers various strategy backtesting tools to optimize your investment strategies. You won’t need to spend time searching for information and risk missing out on prime investment opportunities. With financial big data at your fingertips, TEJ is your best choice!
