After a delay of four months, Firstrade has finally officially launched its fractional stock trading service, aimed at providing investors with a more flexible and convenient stock market experience, enabling trading of fractional shares of over 4,000 stocks and ETFs.

Firstrade's Fractional Stock Trading

Firstrade's fractional stock trading service allows investors to start trading fractional shares at a minimum price of $5 per transaction, with no maximum order limit. This is particularly advantageous for investors interested in investing in high-priced stocks with lower capital outlay, thereby expanding opportunities for more investors to enter the stock market.

The company has integrated fractional stock trading into its web and mobile platforms, putting Firstrade on par with other U.S. brokers and brokerage firms that have launched similar services in recent years, such as Interactive Brokers.

Don Montanaro, CEO of Firstrade, emphasized, "The launch of fractional share trading is not only an extension of our services but also demonstrates our commitment to breaking down barriers in the investment field, making it easier and more affordable for individuals to participate in the financial markets."

In addition to lower entry barriers and access to over 4,000 different investment tools, the service will also offer DRIP or dividend reinvestment. Users can automatically reinvest dividends from fractional shares, ultimately accumulating full ownership of company shares. This move follows Firstrade's announcement two months ago of its partnership with Trading Central to provide clients with advanced technical analysis tools, marking another adjustment to its product offerings.

Firstrade initially revealed plans to offer fractional shares in October of last year, with the first launch scheduled for December. However, the launch of this service was delayed by four months. While the reasons for the delay were not disclosed, Firstrade customers in the United States and several other countries where the broker operates will eventually have the opportunity to use fractional shares.

Popularity of Fractional Shares

For many investors, fractional stock trading offers two significant advantages: easier access and diversification of investment portfolios.

An increasing number of companies and brokers are incorporating fractional shares into their products and expanding them to new markets. Recently, XTB expanded its fractional share product to the UK and UAE markets.

Interactive Brokers launched fractional stock trading in Canada and several months ago also introduced it in Europe. Devexpers is also considering launching fractional stock trading, benefiting from its partnership with DriveWealth.

Even with smaller investment amounts, fractional shares enable investors to diversify their investment portfolios. Diversification is a key strategy in managing investment risk, as it involves spreading funds across different assets or industries to minimize the impact of any single investment's performance on the overall portfolio.