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Sunday, August 2, 2020

Testbuy For Newbies Don’t Follow the 8k Rule


Sharing a bit of my 2 cents about the 8k rule for newbies like us.

What I understand about the 8k Rule


8k rule simply means buying just enough stock shares so that the fees you pay to your broker will be worth it.

Well I admit it, I don’t really know much about the 8k rule, but it somehow falls on that definition- one way or the other.

Don’t Follow the 8k Rule when Testbuying especially for us Newbies

The definition of newbies is pretty much new to the Philippine stock market and would you agree a newbie know little to none when it comes to trading?

That is why the 8k rule doesn’t – shouldn’t apply to us.

Because 8k is a big money, it might worth half a month of your salary so why follow an advice just to follow a so called ‘good advice in trading’.


Using Oddlot for Newbies

When I started Philippine Stock Market last December 2018, what’s only in my mind is to earn money.

But just to be safe, test buy, that is the advice I get. Testbuy.

It turns out that you can testbuy but risking your entire portfolio just because you don’t know the meaning of testbuy.

You can testbuy 100 lots of a certain stock and that might cost 5000 pesos, but wait, you wanted to follow the 8k rule so you added more position.

Testbuy for Study Purposes


I did a couple of trades this June 2020 and testbuy 1 stock of BDO, 2 stock of BPI and 10 Stocks of Metrobank.

These are all for study purposes.

But testbuying this way means I gain valuable insights and giving me more confident on the strategies I made.

What Happened to These Trades

These oddlot purchases have its success and failure.

BDO went up, but since I only have 1 position, the fees made my average price so high. Yes it went up but not high enough to the point where I can pull out my position.

The same thing happened to BPI, it did went up but my average is high so I cannot exit the trade. Of course even if I bought just 1 or two stock, I still want to exit the trade and gain profits.

My last trade is Metrobank, since I have 10 position with Metrobank, when the price goes up, it gives me enough money to profit and pay for the fees to my broker.

My feeling?

Super happy!

What about my losing trade with BPI and BDO?

Those trades cost more than 200 pesos and it’s a lot, because we should value our money no matter how small it is, but it did not caused me a heartache.

I just proved that my strategies did not work and it cost me 200 plus pesos for failing. I am OK with it.

Final Thoughts

I hope with this little experiment, you gained up a valuable insight on how to ‘testbuy’ your strategies on the stock market.

8k rules doesn’t really apply to us newbies. 8k rule will surely give you a heartache when you buy a falling stocks.

Sure it’s a happy day when your stock pick is right!

I just want to give this advice to people who has no idea on the stock market just like I am.

For a year and a half now in the stock market I learned a lot with losing stock but thankfully, God still gives me strength to stand back up and continue on learning.

Money is not the Goal.

But seek first the kingdom of God and His righteousness and all these things will be given to you as well.

Mathew 6:33

That is it.

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