Look-ahead bias

Look-ahead bias is using information in a backtest that would not have been known yet at the moment of the simulated decision.

A backtest must only ever know what a real trader knew at that instant. Look-ahead bias breaks that rule — using a closing price to make a decision that would have had to be taken before the close, or using a restated earnings figure that was not public until weeks later. The result is an edge that exists only because the test peeked at the future.

Avoiding it means strict point-in-time discipline: signals computed from data available before the decision, and fills priced at the next achievable price rather than the one that triggered the signal. It is closely related to survivorship bias — both are ways the past gets quietly rewritten in the strategy's favour.

Definitions are educational and consistent with Thuztra’s backtest methodology. Backtests are research, not investment advice; past performance does not predict future results.