I used the Five Finger Test usually during library time with students, but if you're using it to find a guided reader appropriate to the child's reading ability (ie. from the Life Bible Booklets levels) continue to a higher level if no fingers are raised by the end of the page read.
This is not a tell all test that will divulge loads of information on your child's comprehension and decoding skills but it will help you choose texts they can read comfortably and with enjoyment.
The Five Finger Test is a helpful and simple tool to help choose texts suitable to a child's reading level; a tool most children will be able to use themselves.
Choose a book and open to any page (preferably a page with full text and no images) and begin reading down the page. Every time your child comes across a word they don't know (Indicators can be: no pronunciation, incorrect pronunciation, inserting a wrong word, or unsure of the meaning) one finger gets raised. If before, or by the end of the page the child has raised all five fingers it means the text is probably too difficult and your child will struggle with it, rather than enjoy it. This exercise can be repeated until an appropriate book is found.