I just came across a very interesting topic, about the stories of two legendary traders in Japan. One of them is the famous BNF, whose real name is Takashi Kotegawa, hailed as the god of trading. The other is CIS, known as the strongest retail trader. These two are not only longtime friends but also have remarkably similar experiences—they both started trading during university, gradually accumulating wealth with small initial capital, and eventually managing billions of dollars.

What made them famous was the famous J-COM order mistake incident. That day, CIS made 600 million yen, which was already impressive. But Kotegawa was even more ruthless—he made 2 billion yen in just 10 minutes, roughly 150 million RMB at the exchange rate at that time. Such level of operation is rarely publicly discussed in Japan’s trading circles, but both of them have shared their trading ideas, which have been studied and applied by many traders. Looking back, these methods still hold valuable reference for today’s markets.

Kotegawa’s path to success actually started with contrarian investing. Between 2000 and 2003, the internet bubble burst, global stock markets entered a bear market, and Japan was no exception. Most investors were losing money, and sentiment was extremely pessimistic. But Kotegawa saw something different—he realized that even in a bear market, stock prices wouldn’t keep falling forever; there would be rebounds, and assets could be seriously undervalued.

His approach was straightforward: by observing the deviation rate of the 25-day moving average, he identified stocks that were significantly away from their intrinsic value. For example, if a stock’s 25-day moving average is 100 yen, and the current price drops to 80 yen, the deviation rate is -20%. When this number is sufficiently negative, it indicates the stock is severely undervalued, presenting a buying opportunity. This requires great courage and time for in-depth research.

By 2003, as Japan’s stock market began to rebound and the market environment changed, Kotegawa also shifted his strategy. He moved from picking cheap stocks to trend-following, riding the upward momentum of the market. This transition was crucial, directly causing his assets to soar from 100 million yen to 8 billion yen.

He is especially skilled at short-term trades lasting two days and one night, holding 20 to 50 stocks simultaneously to diversify risk. Smarter still, he leverages industry linkages—for example, among the four major steel companies, if one rises, he buys the other three that haven’t risen yet, riding the entire industry’s upward wave.

CIS’s trend-following principle complements Kotegawa’s strategy from another angle. He believes that stocks that are rising steadily are likely to continue rising, and those falling steadily are likely to keep falling. It sounds simple, but most people can’t do it because our intuition tells us that stocks that have risen too much should fall. But markets don’t operate that way; they have strong continuation tendencies. Strong stocks attract more capital, becoming even stronger, while weak stocks grow weaker.

He emphasizes not to buy on dips. Many people see a strong stock have a brief pullback and want to buy the dip, but no one knows if that opportunity will come again. In a bull market, doing so often causes missing the entire rally. The same applies to averaging down on losing positions—doubling down on failed trades only increases losses.

What truly matters is the overall return of the account, not the win rate. Risks and losses are inevitable in markets; the focus should not be on avoiding failures but on cutting losses promptly—allowing losses but aiming for small losses and big gains.

Both legendary traders also share a common warning: don’t blindly trust past rules. Markets are complex, dynamic systems. Once a rule becomes widely known, it often quickly becomes ineffective. Truly excellent traders are usually born during major stock crashes, economic crises, or market turning points. When most people are panicking and clueless, the market experiences huge volatility, and the bigger the volatility, the more hidden opportunities there are. This is the best time for those who can stay calm and act decisively to stand out.