My friend does not have "real skill." However, he does have real discipline in following a fairly simple trading formula. He often buys and sells the same couple of stocks for many days, and is studying technical indicators which he hopes will enable him to hold positions for more than one day with little risk when conditions are favorable.


One reason he has limited his trades to only the highest rated stocks is that he has not had tools which enable him to monitor thousands of stocks for movement, so he just targets the highest rated ones that meet his criteria. However, he also believes his EV is increased by betting on these highly rated (and relatively fundamentally sound) stocks. Is it possible that his EV is further enhanced by the fact that many other investors use the same stock ratings, helping to create greater demand for these stocks?


By the way, I slightly understated his batting average. Thus far, over 95% of his trades have been profitable (though some of the profits were very small after commissions and taxes).