A pitfall in backtesting where future data is inadvertently used to make trading decisions in the simulation, essentially “peeking” at information that wouldn’t have been known at the time. Look-ahead bias means the backtest is unrealistically optimistic. In simple terms, it involves having prior knowledge of market behavior before running the backtest. For example, using a technical indicator value that includes data from the end of the day to decide a trade placed earlier in the day would be a look-ahead bias. Avoiding this bias is crucial for a valid backtest.

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