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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