What is Look-Ahead Bias?

Look-ahead bias occurs when a historical test uses information that was unavailable at the time of a simulated decision. Examples include a later closing price, revised economic data, or an event timestamp recorded before the information reached the market. The error can make a rule appear stronger than it was. Prevent it by evaluating records in time order and checking when each input became observable.

Also known as: lookahead bias, future data leakage, forward-looking bias

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How look-ahead bias enters a test

A backtest has look-ahead bias when an earlier trigger depends on a later observation. Common causes include using a full-day high before the day ended, joining data by the wrong timestamp, or using a revised report as if the revision were known earlier.

How to prevent it

Evaluate every input in timestamp order and record when it became observable. Freeze the trading strategy before opening the holdout period. Tests, code review, and manual trigger inspection should confirm that future records cannot change an earlier decision.

Related terms

Backtest A backtest is a replay of a trading rule against historical market data to see when it would have fired and what happened afterward. Trading Strategy A trading strategy is a repeatable rule for deciding when to observe, alert, enter, reduce, or exit a position. Systematic Trading Systematic trading uses written, repeatable rules to decide when a market condition should trigger review, an alert, or a trade decision. Candlestick A candlestick is a single bar on a price chart representing the open, high, low, and close prices for a given time interval.