Glossary › look-ahead bias

Trading glossary · advanced

look-ahead bias

A testing mistake where your test secretly uses information from the future, so results look far too good.

The fuller meaning

A backtest error that uses information not available at the time of the decision, such as deciding at the open with that day's close. It produces impossibly smooth equity curves; checking a few trades by hand against the chart is the fastest way to catch it.

look-ahead bias, also called look-ahead bug.

Related words

at the money · backtest · backwardation · basis · call option · contango · data snooping · delta · edge · entry trigger