RTM
for the newbies,
who want to understand,
what is RTM,
and VARIANCE,
let me try to explain in simple example.
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RTM=regression toward mean.
Variance =the losing hit keep coming,
while the winning seem stubborn to hit.
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RTM.
oversimplified example..
lets play a game.
Say, inside a bag,
there 50red and 50black
ping-pong balls.
You take out,draw,
one ball at a time,
and NOT putting back the ball,
into the bag.
You cast the ball away.
u set aside the ball.
Then, everytime u take a ball out,
u note down, the color of the ball,
on a piece of paper.
After 100th ball ,
taken out,
you will see that,
if red value=1,
black=-1,
simply mean,
red, u win,
black , u lose.
At the 100th ball,
the result,
win/lose =ZERO value,
no win, no lose,
and
the probability of,
WORST VARIANCE,
=-50 NEGATIVE,
streak of 50losses.
OR,
=+50 POSITIVE...variance...
streak of 50wins...
No matter, whether,
you win,
best profit=+50,
or lose ,
worst losses=-50,
at the end, the 100th ball,
the value will,
return to mean=0.
The 50red/50black balls-in-bag,
is a 'FIXED' with no EDGE game.
The best win possible=+50,
and worst possible=-50,
if you CHART the profit/loss,
as a single LINE chart,
from 1st ball, to the 100th ball,
and after many sets of games,
u will see the line move up and down,
and the LAST profit/loss=0value,
that REGRESSION TO MEAN.
RCTM,
mean ,
regression CLOSER to mean,
the end line of profit loss,
due to unlimited 'balls',
and EDGE, and variance,
and unlimited spins,
only come close to zero,
as a probability.