First In, First Out (FIFO)
First In, First Out (FIFO) is a method used in accounting and financial reporting to determine the order in which inventory or other assets are sold or disposed of. In Forex trading, FIFO is a rule implemented by some brokers that requires traders to close their oldest trades first if they have multiple positions in the same currency pair. This means that if a trader has several open positions in the same currency pair, the broker will close the oldest position first when the trader decides to close a portion of the position. The FIFO rule is designed to prevent traders from “cherry-picking” their positions and can have an impact on the order in which positions are closed and the resulting profit or loss.