How much difference is there between a few shares? Complete analysis of trading units in Taiwan and U.S. stocks

Many friends new to the stock market often get confused by the concepts of “one share” and “one lot.” Especially when you see U.S. stocks priced very cheaply and Taiwanese stocks seem ridiculously expensive, you might wonder: why is there such a big difference? In fact, the difference between one lot and multiple shares is the key factor affecting trading costs.

How to read stock prices: how much is one share worth?

First, clarify a key concept: the stock price is the trading price of one share, representing the amount you pay when buying or selling. In the stock market, stock prices fluctuate in real-time based on the latest transactions between buyers and sellers, and different countries use different currencies for pricing.

For example, Tesla (TSLA) in the U.S. on August 2, 2023, was priced at $254.110. This means buying one share of Tesla at that time costs $254.110. The same stock on January 6, 2023, was only $101.81. In just seven months, Tesla’s stock price increased by over 150%, demonstrating the power of investor confidence in the company’s growth.

The same principle applies to Taiwan stocks. For example, when TSMC’s stock price is NT$561, it means one share costs NT$561. Similarly, Taiwan Cement (1101.TW) on April 30, 2024, was NT$32.10 per share.

So, checking how much a stock costs is simple: just look at the current market price. The stock’s par value (the price set when the company splits its share capital) is just a historical record and has little relation to the current stock price. What truly determines the stock price are the company’s profitability and investors’ expectations.

Why does Taiwan stock have “one lot” and “one share”? How many shares make up one lot?

This is where the core difference between one share and one lot comes into play. In Taiwan stock trading, the basic unit is a “lot,” and one lot equals 1,000 shares. In other words, buying one lot of Taiwan stocks means purchasing 1,000 shares at once.

In contrast, U.S. stocks are traded in units of one share—there’s no “lot” concept. You can buy 1, 10, 100, or more shares, depending on your preference.

What does this difference in the number of shares per lot mean? Suppose TSMC’s stock price is NT$561. One lot would cost NT$561 × 1,000 = NT$561,000, roughly 560,000 NT dollars. For most retail investors, this is a very high capital requirement.

To address this, Taiwan’s market introduced “odd-lot” trading, allowing investors to buy and sell fewer than 1,000 shares (from 1 to 999 shares). This way, you can buy TSMC shares for just a few thousand NT dollars without needing to save up NT$560,000.

What are the actual differences between trading one share versus one lot?

Here’s a detailed comparison:

This means full lot trading offers high liquidity and quick execution but requires more capital. Odd-lot trading has a lower capital barrier but less liquidity and potentially slower execution. Investors should choose based on their capital and trading goals.

How to compare one share and one lot between U.S. and Taiwan markets?

This is the real key comparison. Taiwan’s trading unit is 1 lot (1,000 shares), while U.S. stocks are traded in units of 1 share. Therefore, the entry barrier for full lot trading in Taiwan is much higher than in the U.S.

For example, TSMC is listed in both markets. In Taiwan (code 2330), with a stock price of NT$561, buying one lot costs NT$561,000. In the U.S. (code TSM), with a stock price of $95, you only need $95 (about NT$3,000) to buy one share.

The same company’s stock, due to different trading units, has nearly a 20-fold difference in purchase difficulty. This explains why some investors prefer U.S. stocks over Taiwanese stocks.

Here’s a full comparison:

What factors influence stock price movements?

After understanding the concept of how many shares make up a lot, you might ask: how is the stock price itself determined? Why do prices sometimes soar and other times plummet?

Fundamentals of the company are the most important factors. The company’s financial health, profitability, and growth prospects directly impact its stock price. Good performance attracts more investors, pushing the price up. Conversely, poor results or uncertain outlooks lead to selling.

Macroeconomic environment also plays a crucial role. GDP growth, interest rate policies, inflation, and other macro factors influence the overall market trend. When the economy is booming, investor confidence is high, and stocks tend to perform well. During recessions, investors become cautious, and prices tend to fall.

Market sentiment is perhaps the most easily overlooked yet powerful factor. Investor optimism or pessimism can spread quickly. Bad news, political instability, or global events (like pandemics) can trigger collective panic, causing sharp declines.

To succeed in the stock market, you need not only understand the basics like how many shares make up a lot but also learn to analyze these influencing factors to make smarter investment decisions.