Forex Dictionary Terms

Look-Ahead Bias

Posted on

Definition – What does Look-Ahead Bias mean?

A look-ahead bias occurs when trading simulation includes data that would not have been known or available at the time period being tested. Including this information will compromise the accuracy of the results, falsifying the true performance of the trading strategy being tested.

ForexTerms explains Look-Ahead Bias

Even though this sounds insignificant, market trends are formed by the timing of information as much as the content of it. To get an accurate test, it is vital that the trader only uses information that was available at the precise time of the trade. Traders need to be aware of a possible look-ahead bias when they are backtesting new trading strategies.

Other Terms

Random Articles