What is Survivorship Bias?
Survivorship bias is the error of testing a strategy only on assets that still exist today, which leaves out the ones that failed or were delisted along the way.
How it works
A stock screen run on today's index members quietly excludes every company that dropped out of the index, usually because it did poorly. The same applies to crypto, where many coins from earlier years have since collapsed. The backtest then looks better than a real investor's experience at the time, who could not know which names would survive.
What it can't tell you
The fix is a point-in-time universe, listing what could actually have been bought on each date, and that data is harder to get than the current list.
Does it work as a strategy?
This is a concept more than a trading rule, so there is no single strategy to score. It matters for reading the results below.
Tickfloor's research desk has backtested 517 strategies, most against an equal-weight benchmark of the same assets rebalanced daily that pays no costs (the strategies pay theirs). After correcting for the 598 tests run (Benjamini-Hochberg), 0 passed. That does not prove no strategy works. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.
Common questions
What is Survivorship Bias?
Survivorship bias is the error of testing a strategy only on assets that still exist today, which leaves out the ones that failed or were delisted along the way.
How does Survivorship Bias work?
A stock screen run on today's index members quietly excludes every company that dropped out of the index, usually because it did poorly. The same applies to crypto, where many coins from earlier years have since collapsed. The backtest then looks better than a real investor's experience at the time, who could not know which names would survive.
What are the limits of Survivorship Bias?
The fix is a point-in-time universe, listing what could actually have been bought on each date, and that data is harder to get than the current list.