Are there any trading platforms that support a Last in First Out (LIFO) tax basis? So far, I've tried IB TWS and TradeStation. TWS supports LIFO for stocks but not for futures. Other posts indicate that NinjaTrader also does not support LIFO. Any help is appreciated.
Can you help answer these questions from other members on futures io?
I realize this is an old thread; but, for me, the
topic is very important.
I use a trading style I call "micro incremental
multi-position scalping with intermediate
partial profit-taking" which is a LIFO style.
I don't call it that since it's too difficult to
remember; but there are not likely to be
platforms supporting that style, so I always
have to write my own.
I use NinjaTrader, so wrote an Order Entry
LIFO platform in C# within their Strategy
framework, with an "old fashioned" Winforms
interface instead of clunky WPF of course.
The Trader wants to know his price break-even
at all times, based upon a LIFO (Last In, first
Out, with a partial profit, hopefully).
He also wants to know when there is a
candidate for Partial Profit taking, in case
of prolonged congestion or "chop" in the
market, while underwater.
The mindset here is to add positions when
the price is moving against you; thus improving
your Cost Basis, and resilience in handling
Price Adversity.
[edit] She must not be "guessing" about the
market direction; so needs heavy support
of realtime indicators to show the market
direction; otherwise it's not possible to
confidently add to an incremental position
when price is moving against her (or him).
One downside to my style of trading is, of
course, that when partial profits are taken,
which offset the remaining open position
in a "trading frame" (the aggregate trade
which may consist of dozens or even hundreds
of individual trades) those Profit-takes do
reduce the overall position size.
When enough Profit has been taken to offset
the Open losses, then we are "break even".
It's a great approach, because it emphasizes
multiple small entries which, taken together,
result in the overall result; and primarily
allow the Trader to take Price Adversity much
more gracefully, and to give herself a
"pat on the back" every time a Partial Profit
is taken to offset an underwater position.
The downside is that when Partial Profits are
taken, of course, the overall Position Size is
reduced; and the Cost Basis shifts.
There are times when we want to defer Partial
Profit taking (which reduces our position size)
and wait until we profit against the aggregate Volume Weighted Average Price Cost Basis
instead.
If underwater, and there is significant "chop" then
there is opportunity to take Partial Profits,
but she must remember that if "chop" appears
to be ending, and the aggregate position begins
to run in her favor, that the Trader is better off
by holding more size; so that the final Push
she has worked so hard to wait for; yields the
greatest profits.
In doing this, the LIFO method gives what I think
is a very clear way of thinking about multi-position
aggregate positions; and of course FIFO calculations
along the way (which brokerages use as standard),
will be wildly misleading as to the profit or loss gained
so far, the cost break even price; and so the LIFO
trader must ignore that method of accounting for
the entire position ("the trading frame") until flat.
When FLAT, then the LIFO and FIFO methods will
completely agree, of course.
You can do it very easily in SierraChart. You can decide which matching style you would like to use. At the end of the day this makes no difference in terms of P&L, so it will be just for your visualization.
If you don't know how to do this in Sierra let me know and I will check.
)