I'm not new to margin trading, but it is the first time I'm using FIFO mandatory rule - First in First out.
That means that as your place orders, when you want to close them you are forced to close by the order in which they were place in. That doesn't seem bad at all, except if the market moves against you, as it just did for me.
So I entered 2 long position, they were going fine, and just when I was about to close it, wham, Eth dumped pretty hard. I believe its shaking, not market so want to hang strong, its already going up.
So now I want to make up for it entering lower longs, hopefully breaking even mid-way, maybe even take a profit.
So I'm entering lower longs, and as they become profitable, it makes sense for me to close them and gradually protect myself. Problems is, as I "close" the winning lower longs, they don't disappear. Due to the FIFO rule, I liquidate parte of the first order, which is loosing.
Makes sense and I still win, now my last lower long, despite displaying profit, it is in fact not real, as I've liquidated that profit from the first higher long.
Let me try an illustrate;
1st) High Long (negative profit)
2nd) High Long (negative profit)
3rd) Lower Long (little profit)
4th) Lower Long (little profit)
So when I close the little profit
1st) High Long (negative profit) - partial margin closing (equal to little profit gains from Lower Longs) = High Long with less negative profit
2nd) High Long - Untouched
3rd) Lower Long - Untouched
4th) Lower Long - Untouched
So how on earth do I make sense of when I break even, or when I manage to recoup to profits?
Hope you followed my logic. FIFO makes perfect sense in wharehouse management, but makes my head spin in Margin if you're loosing. IF you're winning it's quite logical, I can't make sense of protecting loses.
Anyone?
You could ask at the kraken thread, or support, if they could add the possibility to choose whether to use FiFo or LiFo.
https://bitcointalk.org/index.php?topic=290799.0
