The Invisible Bias That Inflates Everything

What Survivorship Bias Looks Like

If you only backtest instruments that exist today, you are excluding all the instruments that were delisted, merged, or failed during the test period. The surviving instruments are, by definition, the ones that did well enough to survive. This creates an upward bias in backtest results that can be substantial for equity strategies.

S32 validates that V7's instrument universe is survivorship-bias-free by cross-referencing the backtest universe against historical instrument listings. Every instrument traded in the backtest existed and was actively traded during the period in which trades were taken.

Confirmation of Zero Bias

For V7's primary instruments (major forex pairs, gold, silver, major indices), survivorship bias is essentially zero. These instruments have been continuously traded throughout the entire 7.5-year backtest period. None were delisted, merged, or structurally changed.

The CRYPTO cluster is the exception. Some crypto instruments available in 2024-2026 did not exist in 2018. S32 confirmed that no trades were taken on instruments before their actual listing date. The backtest engine handles this automatically by only generating signals when data is available, but S32 provides independent verification.

Why This Check Still Matters

Even though V7 trades liquid instruments with minimal survivorship risk, S32 exists for three reasons. First, it provides auditable proof for investor due diligence. Second, it validates the data pipeline, catching any bugs that might inject future instruments into historical periods. Third, it establishes the methodology for when V7 expands to less liquid instruments where survivorship bias becomes a real concern. The check takes seconds to run and adds nothing to the regular trading pipeline. Its value is entirely in confidence and audit compliance. For a system targeting institutional capital, having a documented survivorship bias check is table stakes.