Google CEO recently announced that the company is not looking to split their stock because Fractional Shares are available to investors.
A week later, we now can officially trade Fractional shares on the Webull App trading platform.
This article will give you a step by step tutorial on everything you need to know on fractional shares trading on Webull.
Table of Contents
What Is Fractional Shares Trading
A fractional share is less than a whole share of a stock.
That is a partial share between 0.00001 and 0.99.
Instead of investment in a full share price, an investor can just purchase a small piece of the entire stock.
It has been a long time coming for retail investors to get access to this feature.
Finally, Webull has made the wait for fractional shares trading worth a while.
Why Do People Trade Fractional Shares
The valuation are getting so high with some of the US stocks that it has gotten more and more difficult for small investors to get into some of the big name stocks.
The likes of NFLX, ROKU, NVDA, APPL (before the Split), TSLA (even after the split) may just be too expensive for some beginner investors.
Lets not even bring the ones above $1000 into this conversation.
AMZN, GOOG are too good examples of stocks that a great deal of traders and investors cannot have access to without fractional shares trading.
Now with the introduction of fractional shares, anybody with a small account has the opportunity to invest in the same stocks as the big institutions.
With just $50, you can purchase 0.014 fractional shares of AMZN .
Or you can elect to go with GOOG fractional shares and the same $50 will allow you to own 0.02 shares.
Fractional Shares and Dividends
Assume you hold fractional shares of a Dividend paying stock.
You will be able to earn dividend on your fractional shares proportional to your fractional shares holdings.
As an example, if a dividend pays $1 on a full stocks and you hold 0.33 fractional shares, you will receive $0.33 as a dividend payou.
This represent 33% of the dividend because you hold 33% of the whole stock.
Legal Impact of Fractional Shares
As a shareholder of a fraction shares, you are not entitled to proxy voting.
However if you own some whole shares and fractional shares, the whole share portion of your investment gives you the rights to proxy voting.
This may no matter for most retail investors because they own so little of the shares that their voting does not have a great great of impact.
Webull Guidelines On Fractional Shares Trading
Before you get too excited at the prospect of building your portfolio of fractional shares on some of the big name stocks, here is what what you can and cannot do on Webull fractional shares trading.
Can you Trade Fractional Shares on All Stocks ?
As of this writing, Webull has opened fractional shares trading on only certain stocks and ETFs.
The main stocks on the S&P500 are available for fractional trading.
How to find out that your stock of choice is eligible for fractional shares trading on Webull ?
You will see a green diamond icon on the details page of your stock as displayed on the view above for QQQ.
I ran my entire watchlist to check for availability and all of them are enabled for fractional trading.
The only stock without fractional shares trading activated is SOS.
This is a less than $3 stock that came on my radar recently as a potential meme stock.
Can You Buy Fractional Shares of Bitcoin ?
Yes, all major cryptocurrencies are eligible for fractional shares trading.
A single bitcoin can be sliced as low as you desire.
This enables investors to manage their exposure to this awfully volatile asset.
When Can you Trade Fractional Shares on Webull
You can only trade fractional shares during regular market hours.
Which means that you have the window of 930an Est to 4PM Est each weekday.
That is tough luck for pre-market and after hours traders who may be looking for bargains outside of the intraday trading.
What Are the Order Types Supported on Fractional Shares
There is one and only one order type for buying and selling your fractional shares on Webull.
You will need to set your order type as a MArket Order.
This means that you will be buying the fractional shares at the going price in the market.
Therefore it precludes you to place limit orders that are often used by traders.
How Much Do Money Do You Need to Trade Fractional Shares
There are two restrictions on the minimum number of fractional shares you can buy and sell.
The minimum number of fractional shares you can buy on Webull is 0.00001 shares with is one divided by 100 thousands.
The other requirement is that you order must be at least for $5.
Let’s use Berkshire Hathaway Inc (Ticker: BRK-A) as an example to illsutrate this.
The BRK-A whole stock is worth $417600. That is 417 thousands dollars and some change for just one share.
If you divided this per 100000, you end up with $4.176.
This is not greater than $5 so you will need to buy more than 0.00001 share of BRK-A.
0.0002 shares will cost you $8.35 therefore that is the absolute minimum of shares you can start with.
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Is Short Selling allowed with Fractional Shares?
At this time, Webull guidelines do not support short selling on fractional shares.
I am not sure if in the future this feature will be enabled.
However, it goes against the spirit of fractional shares which is mainly to allow small investors to buy high price stocks.
Can You Transfer Fractional Shares From Broker to another
You may be limited on where you can transfer your fractional shares to.
Webull can only transfer your fractional shares to brokers that are also using Apex clearing as the clearing house.
Some examples of Apex clearing brokers are: M1 Finance, SoFi, Stash, Wealthsimple, Beteerment, Firstrade, Stockpile.
What can yo udo if your brokerage is not Apex Clearing?
You will have to liquidate the fractional part of your position and transfer the moeny as cash.
How To Start Fractional Shares On Webull App
Trading Fractional shares on Webull can be a little bit intimidating for the first time.
However, it is not that complicated by following the simple steps below.
- Select your stock of interest and insure that it is eligible for Fractional shares trading.
A green diamond icon should be displayed on your stock details.
2. On your order ticket, change the order type to Market (from your default LIMIT) and the following display confirms if your stock is enabled for fractional shares Trading.
3. Click on Whole Share to switch to Fractional Shares as shown below
4. Finally, Click on Buy to Get Order Confirmation screen showing the quantity and cost of your fractional share trade (if buying)
After you hit confirm, some error message may appear if you try to trade like 1.2 sahres.
this is not a fractional share at this point.
Your number of fractional shares is always less than 1.
So you will need to buy the whole share separately.
The other message you may encounter is if your total order is less than $5.
I have a good illustration of that in the short video at the bottom of this article with the above steps fully depicted.
How To Calculate How Many Fractional Shares You Can Buy
You may be wondering how many fractional shares you can get for your specific budget allocation.
In order to help you with that, I am providing this table for some of the major stocks.
How to use this table.
Look for your budget on the top row starting from $ through $75 and your stock of interest on the first column.
The intersection gives you the number of fractional shares you can purchase with that money.
Download Our Free Fractional Shares Calculator
Fractional shares calculation can become tricky.
Therefore, I ma providing my free Fractional Shares calculator for download for any stock.
Just the current price of the stock and the calculator gives you an idea at different price of how many fractional shares you can purchase.
Also, the calculator will enable you to modify your initial investment if the suggested numbers do not match your desired investment.
Just change how much money on the first row and you automatically get the answer to how many fractional shares you can afford to buy with the money you have.
We provided a step-by-step tutorial on how to trade Fractional shares on Webull App.
As of this writing, I am still waiting to see if the feature will be deployed on the Desktop App as well as on Paper trading.
This is a big step towards leveling the playing field between the big institutions and small retail traders.
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