Tales of a Technician: The Math of Scaling In
February 14, 2022
Today’s video looks at the difference between FIFO (first in, first out) and LIFO (last in, first out) in the context of scaling into a position. Adding multiple tiers to a position can get complicated in a hurry if you don’t know how to keep track of the math. Moreover, each broker may display your positions differently (average credit vs. individual tiers, for instance). This video will help you better understand.
Notes
FIFO = first in, first out = Enter Tier 1, Enter Tier 2, Exit Tier 1, Exit Tier 2
LIFO = last in, first out = Enter Tier 1, Enter Tier 2, Exit Tier 2, Exit Tier 1
Naked Put, 3 Tiers
Tier One: Sell put for 50 cents Target: 5 cents
Tier Two: Sell put for 75 cents Target: 30 cents
Short 2 puts at average credit (aka trade price): 62.50 cents.
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Thanks so much for explaining this Tyler!
Thanks Tyler. It is just a matter of keeping track of it in your journal and making sure you don’t trade or close our based on what you see in TOS. You have to close trades based on your journal. Sometimes it is hard to remember which one you have closed out.