FIFO Stands for "first in , first out . Awhile back I bought some stock , when I thought it had dropped , significantly . But then it continued to drop sharply . So after an unexpected steep drop , I used my reserve to buy more , after all , it's a well run company with a heavily sought after product . And it continued to drop . I was a bit shaken , but then I buy stock on a wave pattern - buy low , sell high . Fortunately , it's begun going up nicely , again . At this point , I could sell the second portion I bought at a decent profit , however , the broker would sell - first in first out , and would show a loss , since the first batch was bought at significantly higher price and it would be counted against that one rather than the second batch .