Survivorship Bias In Trading And Backtesting
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Survivorship Bias in Trading
In this video, we dive deep into the concept of survivorship bias in trading and backtesting. Survivorship bias occurs when we only focus on successful trading strategies or stocks while ignoring those that have failed or been delisted. This can lead to distorted backtesting results and unrealistic expectations.
We’ll cover:
What survivorship bias is and how it impacts backtesting, trading, and investing. Real-life examples of survivorship bias and its effects on trading strategies. How ignoring this bias can overestimate backtest performance. Practical tips for avoiding survivorship bias in your trading. We’ll also discuss well-known studies, like those by Hendrik Bessembinder, that highlight how most stocks underperform compared to short-term Treasury bills and why only a few star performers drive most of the market gains.
If you’re serious about improving your trading strategies and making better-informed decisions, understanding survivorship bias is essential. We’ll show you how to minimize this bias and achieve more accurate backtest results.
Don’t forget to check out our backtesting course for a comprehensive guide on best practices.
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✅ RISK DISCLAIMER Quantified Strategies (SIA Lofjord) is not an investment advisor. The content and information provided are educational and should not be treated as financial advisory services or investment advice. Trading and investment in securities involve substantial risk of loss and is not recommended for anyone who is not a trained trader or investor – it shall be conducted at your own risk. It is recommended that you never risk more than you are willing to lose. Leverage can lead to substantial losses. Any use of leverage, margin, or shorting is at your discretion. Quantified Strategies (SIA Lofjord) is not responsible for any losses that occur as a result of its content and information. Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, Since the trades have not been executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representations are made that any account will or is likely to achieve profit or losses similar to those shown. ... https://www.youtube.com/watch?v=g48vDaRmQKE
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