FIFO rule with regard to scaling trades

Beginner Questions
1

I’m trying to understand the “purpose” of the FIFO (first-in first-out) rule used in the US. First of all, is it true that non-US countries are not subject to this?

What is the purpose of the FIFO rule? Is it entirely psychological?

It messes with my trading, or maybe I should say it forces me to trade differently.

I’m usually keeping a close eye on the “average position line” (Oanda), which moves around depending on how many legs I’ve setup in the trade. I love this line, because it tells me in an instant where my breakeven point is, as well as where my profit target should be (without doing any math, my favorite part).

It occurred to me the other day… if it weren’t for FIFO, I could trade differently and maybe better with scaling situations. For example, if I take out 3 legs on a trade, FIFO forces me to close the first leg first (I think), which is unnatural at best. If a trade is developing nicely, I’d like to just “shave off” the successful parts and manage the unsuccessful parts. In other words, shave risk as opportunities present themselves.

In Oanda I’ve started following the Positions tab instead of the Trades tab. This aggregates all my legs into a single position that I’m trading, so that I can see the cumulative units. I need this number to know how strong my overall position is, what it will take to close the entire trade, and how much more I could potentially risk.

But I don’t like being forced to close the first position first. I’m guessing there is nothing that can be done about this, but it kindof sucks. I’m sure there is probably a good reason why regulators did this, but I don’t know what it is. Seems like this puts non-US traders at an advantage btw.

2

True, at least for now.

What is the purpose of the FIFO rule? Is it entirely psychological?

The IRS requires FIFO in tax reporting, and this has long been the policy in other markets.

It messes with my trading, or maybe I should say it forces me to trade differently.

It shouldn’t. It’s just an accounting method that doesn’t change your final bottom line. It doesn’t impact where you buy/sell.

3

How do you get the average position line to show up in Oanda?

4

Hey bud got a question and possibly an answer for you.

Question:
First how do you get the average position line to show up in Oanda?

Answer:
Second you CAN close any trade in any particular order using Oanda, you just need to click on whatever “leg” (position) you want to close and a pop up window will show up were you can modify or close it. Just hit the submit button and its closed.

I am guess that as of right now you close each leg all at one but buying/selling your total position size and to close the First In trade you buy/sell the number of units that one particular leg equals?

Hope that helps.

Tip: Try it out a few times using just a messily 1 unit trades just to be sure your comfortable with it.