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Fractional Shares

Lesson 21 of 21
Duration 3:02
Level Beginner
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Invest your preferred amounts using IBKR’s Fractional Shares trading permission. This means you can allocate a portion of available funds across shares whose price is already high.

Study Notes:

Clients can allocate a sum of money when investing in stocks rather than buying a specified number of shares. Since many share prices have increased in value over time, investors can buy relatively fewer shares than in years gone by. To help investors put money into stocks they wish to own, Interactive Brokers has created the ability to transact shares in fractional amounts.

To use fractional share trading clients need to permission their account to do so within Client Portal. Log in from interactivebrokers.com and select the head and shoulders icon to the upper right. Click on Settings and scroll down to trading and locate and click on Trading Permissions.

Select the icon for Stocks. Scroll to the bottom of the regions. Check the box next to Global (Trade in Fractions). Click the Continue button to the lower right of the screen. 

Fractional share trading is available for eligible US, Canadian and European stocks (and certain ETFs). The benefit to investors is that they can invest a small amount, say $100 and create a portfolio of several stocks, each of which has a share price higher than $100. In this case, the investor divides $100 equally across four names resulting in very small amounts of fractional shares in each. If the purchase price doesn’t result in a whole number of shares, IBKR buys (or sells) fractional shares for you.  

To create an order in TWS using fractional shares, in the Order Entry panel click within the quantity field and from the pop-up quantity selector choose the currency selection, in this case USD, rather than Shares. The user selects the amount to invest or types the desired amount directly into the input field. In this case the user types $100 into the field. The quantity field now displays QTY 100 USD. Next, the user chooses a time-in-force for the order. In this case since the user leaves the default Limit order in effect, he or she will specify the limit price to pay. When ready, the user clicks the Submit button. An order confirmation will appear and when ready, clicks Transmit to send the order. 

Don’t forget that you will need to enable fractional share trading permission within Client Portal to activate this feature. 

Resources:

Fractional Trading

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Disclosure: Interactive Brokers

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.

Disclosure: ETFs

Any discussion or mention of an ETF is not to be construed as recommendation, promotion or solicitation. All investors should review and consider associated investment risks, charges and expenses of the investment company or fund prior to investing. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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