What it means
Its cousin, survivorship bias, is testing only on assets that still exist today.
In practice
Knowing about this bias makes testing honest. Every decision in a backtest must rest only on what was visible at that moment: closed candles, indicator values as they stood then and levels already on the chart.
Traders guard against it with bar replay tools that hide the future, and by writing rules precise enough to leave no room for hindsight.
What to watch for
It creeps in quietly: an indicator that redraws its past values, a swing point that was only confirmed several candles later, or a memory of how the day turned out. A backtest that looks too good usually contains it.