Why we should avoid cumulative buying of less than 8,000 pesos in the Stock Market

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This is actually part of the things I learned on my first trading at the Philippine Stock Exchange.

I'm gonna explain here why I think we should avoid cumulatively buying stocks less than 8,000 pesos in the stock market.

I am not an expert in trading but what I'm gonna share here is my insight based on my experience during the time I started trading at the PSE.

The idea here is we should maximize the minimum commission of our online trading broker, in my case, it's BDO NOMURA, it's the newest and easy-to-open online trading broker at the PSE today.

I don't know how much other broker charges for every buy and sell transaction but I think it's pretty much the same, for my broker, BDO NOMURA charges.

Look at the computation of the stocks I bought below.

Let's take for example the stock of PIZZA I bought, first, I only bought 100 shares at P12.14 with a total fee of P51.55. Breaking down the fees, we have a total of P22.52 buying fees and P29.03 fees when we sell our 100 stock shares. (The selling fees is much higher than the buying fees because of the sales tax) 

On the same day, I bought again 200 shares of PIZZA and this time the total amount of fees including the buying and selling is only 8 pesos higher than the 100 shares I bought, at P58.30. It should have the same total amount in buying fees but the price of the 200 shares I bought was at P12.16 so it's a bit higher at P22.64 compared to P22.52.

Assuming we will now sell our stocks at P13.00 per share. Our net profit for 100 shares will be P34.45 pesos, that's less of all the fees including the fees when we buy it and when we sell it, and our net profit for 200 share will be P109.70, total profit for 300 share is P144.15.

Now, let's look at all the fees and our profit if we didn't cumulatively bought the 300 shares.

Assuming we directly bought the 300 shares at the price of P12.16. Our total buying fee will just only be P22.76! Imagine? Our total buying fees for 100 and 200 shares is P45.16! That could have been added to our profit, that's money already, right?

How about if we assume to sell our 300 shares at the same selling price of P13.00? Our net profit will be P186.96, that's P42.8 higher than the 100 and 200 net profit!

The gross amount when we buy the 300 shares is still way lower than the 8,000 pesos so I would still recommend to used up and maximize the minimum broker commission of 20 pesos because the broker's commission is 20 pesos minimum or 0.25% whichever is higher.

If the gross amount of your transaction is more than 8,000, then the commission of your online broker will be the 0.25% of it because the 0.25% of 8,000 is exactly 20 pesos only.