Fractional Shares Trading

What are fractional shares? 

Fractional shares are shares with a quantity of less than one, or fractions of a whole share. Firstrade offers fractional share trading for most stocks and ETFs. This means you may trade pieces of a stock, in addition to trading in whole share increments. 

Why trade in fractional shares? 

Numerous stocks command high prices, reaching into the hundreds or even thousands of dollars per share. For individuals with limited capital, selecting suitable investments can be challenging. Fractional share investing overcomes this hurdle, enabling you to invest with as little as $5. The option to buy fractional shares reduces the entry barrier to the stock market, presenting investment opportunities for investors across all levels. 

Corporate Actions and Shareholder Rights 

• Stock Splits 

In the event of a forward stock split, you will be allocated the corresponding fractional shares. For instance, if you held 2.5 shares of ABC with a value of $10 per share, and ABC had a 2 for 1 (2:1) forward stock split, your ownership will be adjusted to 5 shares, each valued at $5. 

In the case of a reverse stock split, in accordance with the stock company’s instruction, resulting fractional shares will either be rounded up, or paid the cash equivalent; for instance, if a stock split leads to 2.1 shares valued at $10 per share, you will receive 2 shares and $1 (representing the ash equivalent of 0.1 shares). 

• Voting 

Shareholder right in proxy voting is only applicable to whole shares; fractional share portion of a position does not have voting capabilities. 

• Dividends 

If your equity position includes fractional shares, and the underlying security issues a dividend, you are entitled to receiving a dividend payment for the fractional shares in your holding. 

• Transfers 

Fractional shares may not be transferred into or out of Firstrade. If you initiate a full asset transfer out of Firstrade, your fractional shares will be automatically sold on your behalf, and the proceeds will be transferred as cash. 

What is fractional share trading? 

Fractional share trading allows you to buy and sell portions of a stock or ETF. This means you can invest an amount of your choice, even if it's less than the price of one full share. 

What are the trading hours for fractional shares? 

You can place fractional share orders starting at 8:00 am ET. The actual trading hours for fractional shares are from 9:30 am to 4:00 pm ET. Please note that extended hours trading is not available for fractional share trading. 

What types of orders are supported for fractional shares? 

For fractional share trading, only market and limit day orders are accepted. It's important to note that only day orders are supported, meaning your order will only be active for the trading day it's placed on. 

Can I short sell fractional shares? 

No, short selling is not supported for fractional share trading. 

Is there a minimum purchase requirement for fractional shares? 

Yes, there is a $5.00 minimum requirement when purchasing a fractional share position. Additionally, the number of shares must be greater than 0.00001. 

What about selling? Is there a minimum amount? 

There is no minimum dollar amount required to sell a fractional position, but the number of shares must be greater than 0.00001. 

Do I need to place separate orders for fractional and whole shares? 

No, you don't need to place separate orders for fractional and whole shares. For example, you can submit a single order for 1.5 shares. 

Are fractional shares eligible for the Securities Lending Income Program? 

No, fractional shares are not eligible for the Securities Lending Income Program. 

Can I place conditional or trailing stop orders with fractional shares? 

No, conditional orders and trailing stop orders are not supported for fractional share trading. Only market and limit day orders are accepted. 

What happens if there is a need for rounding fractional shares in my account? 

When necessary, the quantity of fractional shares in your account will be rounded to the nearest fifth decimal place. 

What is a dollar-based order in fractional trading?

A dollar-based order in fractional trading allows investors to buy or sell shares based on a specific dollar amount, rather than the number of shares. For example, an investor can specify that they want to invest $50 in a particular stock, regardless of the stock's price per share.

Can I cancel a dollar-based order in fractional trading?

Yes, dollar-based orders can be canceled. However, once placed, they cannot be edited; the investor must cancel the original order and place a new one if they wish to change the investment amount.

What is a share-based order in fractional trading?

A share-based order allows investors to buy or sell a specific fraction or number of shares, rather than focusing on the total dollar amount. For example, an investor can specify that they want to buy 0.5 shares of a particular stock.

Can I edit or cancel a share-based order in fractional trading?

Yes, share-based orders in fractional trading can be both edited and canceled. This flexibility allows investors to adjust their investment based on the number of shares they wish to buy or sell before the order is executed.

What happens if I need to sell a symbol not supported for fractional trading?

If you need to sell a symbol not supported for fractional trading, please send an email to service@firstradefinance.com to request liquidation of remaining fractional shares.

What platform is fractional trading available on?

Fractional trading is available on the Firstrade website and mobile app. Please update your Firstrade app to the latest mobile version.