What does meta-look-ahead bias stem from?

Meta-look-ahead bias is primarily associated with pre-existing knowledge of the dataset by the trader, which can lead to an unrealistic assessment of a trading strategy's performance. This type of bias occurs when traders use information or results from a dataset that would not have been available to them at the time of making their trading decisions.

For instance, if a trader backtests a trading strategy using data and incorporates insights gained from future events or outcomes, they may inadvertently inflate the perceived effectiveness of that strategy. This knowledge of future price movements or patterns can lead to overfitting and may not accurately reflect how the strategy would perform in a live trading environment without that foresight.

Understanding that meta-look-ahead bias arises from this pre-existing knowledge helps traders to recognize the importance of evaluating strategies using only the data that would have been accessible at the time of each decision, thereby promoting more accurate and realistic expectations of future performance.