Trading fractional shares allows you to invest in companies which you may not be able to afford the full share price. It also makes it easier for you to diversify your portfolio by allowing you to trade fractional amounts in multiple companies when you otherwise may have only been able to trade whole shares in one or two companies.
Your account is now enabled to trade in fractions, you may buy a fraction of a share based on the amount of cash you specify.
How it works:
When using a Cash Quantity order, you specify the dollar amount you want to buy instead of specifying the number of shares. Rather than buying five shares you elect to buy, for example, $500 worth of a stock. We purchase the equivalent number of shares for that value rounded down to the nearest whole share. Since your account is able to Trade in Fractions, we will buy a fraction of a share to use the full amount of cash you specified and get the greatest possible number of shares for your money. If you want to spend $500 but one share of the stock you want to buy is currently $1000, you will end up with 0.5 shares. If you would like to short a fractional share, you can do so by specifying the fractional share quantity (for example, sell .25 shares).
The ability to trade in fractions and divide your investments among more stocks also makes it easy for you to diversify your portfolio. This maximises your returns by putting small cash balances to work quicker. If you have $500 to spend you can purchase fractional amounts in multiple companies when you otherwise might only be able to purchase whole shares in two or three companies.
To use cash quantity for an order, click in the Quantity field to display the Size Wand, and toggle to USD (or relevant currency). Specify the cash amount you want to use. When the order fills, it will fill as close as possible to your specified amount, rounding down to the nearest whole share if you haven’t enabled trading in fractions. Advisors must enable this feature for their master account before clients can enable and use the feature.