Last in first out - will I screw myself?

[nooby_mcnoob]

I don't like to use average price, rather I like to think of my account as a bunch of products bought at prices X,Y,Z.

I greatly value when I buy products at great prices so I want to hold onto them as much as possible. The prices I don't like as much, I'd want to get rid of faster.

This leads me to want to use LIFO when matching buys and sells.

Is this an OK thing to do or is there something waiting to bite me?

 

[murray t turtle]

I don't like to use average price, rather I like to think of my account as a bunch of products bought at prices X,Y,Z.

I greatly value when I buy products at great prices so I want to hold onto them as much as possible. The prices I don't like as much, I'd want to get rid of faster.

This leads me to want to use LIFO when matching buys and sells.

Is this an OK thing to do or is there something waiting to bite me?

%%
Yes\ it could go against you somewhat; say plan = average down 2 times to 50day moving average. Assume an uptrend which is true, NOV.
So overall profitable on the trade; but the profit came@ last half of the trade. So if you sell it with a profit, the first sell could easy be a loss, even though its overall profit, with second sell.
Maybe better, to sell profitable x, profits ride on y,z......[I think SCHW uses FIFO, + thats my example]

 

[nooby_mcnoob]

%%
Yes\ it could go against you somewhat; say plan = average down 2 times to 50day moving average. Assume an uptrend which is true, NOV.
So overall profitable on the trade; but the profit came@ last half of the trade. So if you sell it with a profit, the first sell could easy be a loss, even though its overall profit, with second sell.
Maybe better, to sell profitable x, profits ride on y,z......[I think SCHW uses FIFO, + thats my example]

I think that's a great example. I never average down though, I only average up which is why I'm considering LIFO. Does that make sense?

 

[murray t turtle]

I think that's a great example. I never average down though, I only average up which is why I'm considering LIFO. Does that make sense?

%%
Makes sense to me;
SCHW, for example, will only do FIFO, on a single ETF. Make sure its OK if you have to cut a loss.
Good question.

 

[nooby_mcnoob]

%%
Makes sense to me;
SCHW, for example, will only do FIFO, on a single ETF. Make sure its OK if you have to cut a loss.
Good question.

Excellent, thanks for the check.

 

[JSOP]

I don't like to use average price, rather I like to think of my account as a bunch of products bought at prices X,Y,Z.

I greatly value when I buy products at great prices so I want to hold onto them as much as possible. The prices I don't like as much, I'd want to get rid of faster.

This leads me to want to use LIFO when matching buys and sells.

Is this an OK thing to do or is there something waiting to bite me?

At the end, it comes down to the same thing. It's just that at a certain period, depending on the accounting method, it could result in losses or profit.

 

[Scataphagos]

%%
Makes sense to me;
SCHW, for example, will only do FIFO, on a single ETF. Make sure its OK if you have to cut a loss.
Good question.

Sounds reasonable.

If you bought at different prices, it's unlikely the IRS will allow you to "pick the one best for you" when it comes to selling. It's also unlikely the IRS will force you to pick the worst one for you. Therefore, FIFO makes sense.

Then again, as that appears to make total sense... it may not be that way at all.

 

[murray t turtle]

Sounds reasonable.

If you bought at different prices, it's unlikely the IRS will allow you to "pick the one best for you" when it comes to selling. It's also unlikely the IRS will force you to pick the worst one for you. Therefore, FIFO makes sense.

Then again, as that appears to make total sense... it may not be that way at all.

%%
Exactly;
the IRS symbol is an eagle with equal balance=equal weight scales.
BUT there are plenty of ways to eVen goof up a good add on[average UP] on a good uptrend. That tends to give a terrible average add up price when it finally turns down\LOL.That maybe why IBD system limits it to 3 or so average ups .
And i limited my average down example to 50 dma in a good NOV uptrend. Terrible average in MAR, 2021 . And trying to average up in MAR,2012, that my not be the way @ all.......

 

[Scataphagos]

%%
Exactly;
the IRS symbol is an eagle with equal balance=equal weight scales.
BUT there are plenty of ways to eVen goof up a good add on[average UP] on a good uptrend. That tends to give a terrible average add up price when it finally turns down\LOL.That maybe why IBD system limits it to 3 or so average ups .
And i limited my average down example to 50 dma in a good NOV uptrend. Terrible average in MAR, 2021 . And trying to average up in MAR,2012, that my not be the way @ all.......

Didn't you ever see the famous pic of the plaque on PTJ's wall... "Losers average into losers"?

 

[murray t turtle]

Didn't you ever see the famous pic of the plaque on PTJ's wall... "Losers average into losers"?

%%
Yes;
+ his older mentor Rich Dennis said ''do your own research\LOL'' Actually i think it wasa sticky note??
And he got super burned averaging down \overtrading on a cotton trade; but cotton has no dividends+ cotton has no earnings. I like PTJ's imagination he named his non profit ''Robin Hood''
Rich Dad looked @ it '' Robin Hood was a crook'' [Not an insult + not really against super payments for Robin Hood order flow/LOL]