Survivorship bias
Survivorship bias is testing only on assets that still exist today, which leaves out those that were delisted, merged or went to zero.
How Survivorship bias is calculated
If a test uses today's list of index members or today's top 100 coins, every name on the list survived to be there. Past losers that dropped out are missing, so average results look better than the real history. The fix is a point-in-time list that includes delisted names with their final prices.
How it is read
The bias grows with the length of the test and with the turnover of the list. A test over five years of a slow-moving index is affected much less than a test over twenty years of small companies or new coins, where many names disappear. Ask where the list of assets came from and whether it was fixed at the start date.
Common mistakes
- Using the current constituents of an index to test a 15-year rule.
- Testing crypto with only the coins still trading.
- Assuming the bias is small without measuring it.
What Tickfloor tested
Tickfloor has not published a backtest of a rule built only on Survivorship bias. It describes or manages something rather than giving a signal, so there is no strategy to score. It still shapes how any tested rule should be read.
Lessons that cover it
Related concepts
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.