Survivorship bias

You only see the people it worked out for. Nobody shows you the ones who blew up on the same strategy.

Author: I. D. Galtsov

Survivorship bias — what it is?

Survivorship bias is judging by the visible successful examples without counting the invisible unsuccessful ones. In trading it shows up especially starkly.

You see screenshots of winning trades, not losing ones. You see the people who made it to a result, not the ones who blew the account and deleted it.

That distorts your sense of what is normal. A steady result looks like an ordinary thing, and your own difficulties look like a personal failing.

1. 100 people — started trading the same strategy
2. A year later — 5 have a good result, 95 have closed accounts
3. Who you see — those 5 write blogs, sell courses and show statements
4. Who you don't — the 95 left quietly and tell nobody anything
5. The error — You look at the 5 and conclude the strategy works for everyone
6. The check — Ask not "how much did you make" but "what was your maximum drawdown"

Survivorship bias — how it is built?

Rely on your own statistics, not on other people's shop windows. A trading journal covering a few months will tell you more about yourself than any comparison with someone else's result.

Survivorship bias — common mistakes

Treating other people's screenshots as a representative sample.

Copying a strategy while knowing only its successful examples.

Comparing your result with someone else's without data on risk and drawdown.

Drawing conclusions about a method from one successful follower.

Related to

• Outcome bias
• Expectancy
• Discipline

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