FIFO Definition. FIFO, or “First In First Out”, is an accounting term that describes the convention for treating items that occur in a queue. In forex trading, a broker will use this convention to determine the order that he closes open positions. All positions opened within a particular currency pair are liquidated in the order in which they were originally opened. The opposite convention is “LIFO”, or Last In First Out. Under this convention, all positions would be handled based on clearing the last item first. FIFO is the more applicable method in most all cases. LIFO tends to be used more in computer programs in sorting operations.
Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.