Ex ante and ex post
What could a trader have known before the week started, and what is only visible after it ended?
In plain words
Ex ante means information available before an outcome, such as prior weekly returns and how far the price sat below its high. Ex post means information that only exists afterwards, such as the week's realised volatility or its worst day. Confusing the two creates hindsight.
Why it matters
Risk judgments should be graded on what was knowable at the decision point. A week can look obvious afterwards while offering little ex ante evidence, which distorts both strategy review and any evaluation of whether a decision was sound.
In a real week: BTC, week of 12 November 2018
Ex ante entering the week of 12 November 2018 (Mon), BTC showed prior weekly returns of 3.96%, -1.52%, -0.06% and -0.56%, with 3 of 4 prior weeks down, and sat 51.71% below its 52-week high. Ex post, the week returned -12.23% to 5662.0, with realised volatility of 75.9% annualised and a worst day of -8.31% on 14 November, placing its outcome in the 18th percentile of history across 39 weeks of data.
A common mistake
Judging a past decision by the outcome alone. A good process can end in a bad week, and a poor process can survive one, so the ex post result does not settle whether the ex ante reasoning was sound.