Using self-mixing interferometry (SMI) with a periodical modulated injection current, high resolution displacement sensing can be achieved by retrieving the initial phase of an SMI signal at each modulation period. However, the existing initial-phase-based detection methods can only obtain a single point measurement of displacement within each single modulation period. Thus, they are only effective when the target is subject to slow movement, or the injection current is modulated by a signal of very high frequency, which are not practical in many applications. In this work, a new method is proposed to tackle the problem. Firstly, a reference signal is obtained by setting the target still. Then Fast Fourier Transform and its inverse (FFT/IFFT) are applied to the reference signal and the SMI signal, leading to a formulation to obtain the SMI signal phase, which enables the SMI system to retrieve the time varying displacement in each modulation period. As the proposed method is able to measure displacement at multiple discrete time instances (dependent on the number of samples for FFT), the measurement resolution is significantly improved over existing method. Hence, the measurement capability of the SMI system is enhanced greatly. Both simulation and experiments are conducted and the results are presented to verify the proposed algorithm.