User:Boo boo foo/Lossless Gap Algorithm

The Lossless Gap Algorithm is a mathematical trading system invented by a software programmer named Ivan Vetsich in Queensland, Australia in 2006. It is primarily used in computerised automated trading systems, although in theory it can also be used and implemented manually by humans in real time. The algorithm asserts that certain financial instruments, such as foreign exchange movements, can be analysed over a sufficient period of time that a predictable character regarding price movements becomes apparent.

The algorithm itself is inherently neutral, insofar as it does not care if a market price has either a strong run upwards, or a long run downwards - it implements profitable trading sequences so long as sufficient runs occur in either direction. The algorithm is by no means perfect, but it does work best in volatile conditions, and works least accurately in very quiet conditions, as exemplified during the quiet currency period of April through August of 2014.

In 2014, Vetsich decided to release the algorithm into the public domain, rather than to keep it as a private patent, as a means of working with fellow mathematicians and trading experts in an open source project. The algorithm is best used in conjunction with the two forms of Lossless Gap Compression working concurrently - that is, a breakout system using best case parameters for a given instrument while also running an inverse system which uses the worst possible parameters for the same instrument, however the sequence of instructions are inverted.

Successful implementations often result in smaller consistent profits being taken in times of reduced choppiness, combined with larger substantial profits being taken during long runs upwards or downwards. Users of the algorithm are most often computer programmers with online trading backgrounds, or vice verse.

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