What Is the FIFO Rule and How Can It Impact Your Trading?

Why It Matters

FIFO can constrain trade management strategies—hindering selective exits, hedging or tax/timing tactics—so U.S. forex traders must plan entries and position sizes with FIFO in mind to avoid unintended closures and execution outcomes.

Summary

The video explains the U.S. National Futures Association’s FIFO rule (NFA Rule 2-43B), which requires brokers to close the oldest open trade first for any given currency pair and size. Using a simple example, it shows that if a trader opens two identical buy positions on EUR/USD, any closure must apply to the first (oldest) trade before the later one. The rule is mandatory for U.S. brokers and affects how traders manage multiple entries, partial exits and position sizing. The presenter emphasizes that U.S. clients of brokers such as OANDA must understand and follow FIFO when closing FX trades.

Original Description

Confused by the FIFO rule in Forex? Understanding the First-In, First-Out mandate is essential for your strategy.

Here, TraderNick explains exactly how FIFO can impact your open positions using a clear EUR/USD example. Learn why your oldest trades must be closed first and how to navigate these regulations effectively.

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