FIFO Rules

FIFO stands for First-In, First-Out. It is a fundamental order matching algorithm used in financial exchanges and order books where the oldest orders in the queue are executed first.

When a trader places a limit order, it joins a queue based on price and time priority. If multiple orders exist at the same price level, the one that arrived earliest is prioritized for matching against incoming market orders.

This mechanism ensures fairness and transparency in market microstructure, preventing newer participants from jumping ahead of those who provided liquidity earlier. In cryptocurrency exchanges, FIFO is the standard method for managing order books, ensuring that price discovery remains orderly and predictable.

It is critical for high-frequency trading strategies that rely on speed to capture price movements. By enforcing strict temporal precedence, exchanges maintain a stable environment for both retail and institutional participants.