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Trading fractional shares has become a popular option for investors who want to invest in high-value stocks without committing to the full price of a single share. Tiger Brokers offers the ability to trade fractional shares on U.S. stocks, making it easier for you to diversify your portfolio with smaller amounts of capital.
However, it’s important to understand how the fees work for trading fractional shares, as they differ from standard stock trades. This blog will walk you through the fees for fractional shares trading and how they compare to standard Tiger Brokers’ fee.
What Are Fractional Shares?
Fractional shares allow you to buy a portion of a share rather than a whole one. This is particularly useful for expensive stocks, where the price of a single share may be out of reach for some investors. With fractional shares, you can invest in top companies like Tesla, Amazon, and Apple, without needing the funds to buy a full share.
Tiger Brokers’ Fee Structure for Fractional Shares
When trading fractional shares with Tiger Brokers for U.S. stocks, the fees are structured differently from regular share trades. Here’s a breakdown:
For Trades Less Than 1 Share:
Commission Fee: Waived – Tiger Brokers does not charge a commission fee for fractional shares if the trade is for less than 1 share.
Platform Fee: 1% of Trade Value, capped at USD 1 – While the commission is waived, the platform fee is 1% of the trade value. However, there is a cap of USD 1 on the platform fee. This ensures that if the trade is small, the fee won’t exceed this amount.
For Trades of 1 Share or More:
Commission Fee: For trades of 1 share or more, the standard commission fees for U.S. stocks will apply (USD 0.005 per share with a minimum of USD 0.99 per order, capped at 0.5% of trade value).
Platform Fee: Similarly, the standard platform fee (USD 0.005 per share, with a minimum of USD 1 per order and a maximum of 0.5% of trade value) will also apply for trades of 1 share or more.
Examples of Fee Calculations:
Example 1: Trade of Less Than 1 Share (Fractional Shares)
If you buy 0.5 shares of a U.S. stock priced at USD 200, the trade value is USD 100.
Commission Fee: Waived
Platform Fee: 1% of USD 100 = USD 1, capped at USD 1.
In this case, you would only pay USD 1 as the platform fee for a USD 100 trade.
Example 2: Trade of 1 Share or More (Standard U.S. Stock Trade Fees Apply)
If you buy 2 shares of a U.S. stock priced at USD 200 per share, the trade value is USD 400.
Commission Fee: USD 0.005 per share x 2 shares = USD 0.01 (Minimum commission fee is USD 0.99, so you will pay USD 0.99 for commission).
Platform Fee: USD 0.005 per share x 2 shares = USD 0.01 (Minimum platform fee is USD 1, so you will pay USD 1 for the platform fee).
For this USD 400 trade, the total fees would be USD 0.99 (Commission) + USD 1.00 (Platform Fee) = USD 1.99.
Why Trade Fractional Shares on Tiger Brokers?
Trading fractional shares opens up many opportunities for investors who may not have enough capital to purchase a full share of high-priced stocks. With Tiger Brokers, you can invest in a wide range of U.S. stocks without having to commit large amounts of money, making it easier to diversify your portfolio and manage risk.
Some key benefits of trading fractional shares on Tiger Brokers include:
Cost-Effective Investment: You can start investing in high-value stocks with as little as a few dollars, allowing you to invest according to your budget.
Flexibility: Fractional shares allow you to allocate specific amounts of money to your investments, giving you more flexibility in your portfolio management.
Low Fees: With commission fees waived for fractional shares under 1 share, and reasonable platform fees, Tiger Brokers offers competitive pricing for fractional share trading.
Conclusion
Understanding how fees work for fractional shares trading is crucial for making the most of your investments on the Tiger Brokers platform. For trades under 1 share, you benefit from commission-free trading, and the platform fee is capped at a reasonable USD 1, making it a cost-effective way to start investing in U.S. stocks. For larger trades (1 share or more), the standard commission and platform fees apply.
If you’re looking to diversify your investments without spending large sums of money, fractional shares through Tiger Brokers might be the right option for you.