Look-ahead bias

Look-ahead bias (peek bias) is any use of information in a backtest that the trader could not have known at the bar in question. The most common forms: using the bar's close to make a decision and then 'entering' at that same close, using the period-end value of an indicator that is only finalized after the period ends, or using fundamental data dated by reporting period rather than release date.

Look-ahead bias is subtle and catastrophic — it can turn a flat strategy into one that prints a perfect equity curve. The discipline is to lag every signal by one bar (decide on bar N, enter on bar N+1's open) and to use release-dated rather than period-dated fundamentals.

Even simple indicators can introduce look-ahead if computed sloppily — a rolling mean centered on the current bar rather than trailing behind it includes future bars. Always verify that indicators only depend on data up to and including the bar in question.