There are two legendary figures in Japan's trading circle, one is known as the God of Trading, BNF, whose real name is Takashi Kotegawa, and the other is called the strongest retail investor, CIS. Interestingly, they are not only longtime friends but also have remarkably similar experiences—they both started trading in college, gradually accumulating capital from small amounts to over a billion yen.

What is most impressive is the incident where J-COM mistakenly placed an order. That day, CIS made 600 million yen, which was already incredible, but Kotegawa Takashi was even more aggressive—he made 2 billion yen in just 10 minutes, roughly equivalent to 150 million RMB at the time. In Japan’s usually low-profile trading scene, such a record directly became legendary.

Even more rare is that these two giants are willing to share their trading ideas. Kotegawa Takashi once shared a trend-following strategy, and CIS also publicly revealed his trend-following principles, which have been studied and borrowed by countless traders, and are still very applicable in today’s markets.

Kotegawa Takashi’s story begins with his early contrarian investing. Between 2000 and 2003, the internet bubble burst, global stock markets entered a bear market, and Japan was no exception. Most people were losing money, and sentiment was extremely pessimistic. But he discovered a key point: even in a bear market, prices don’t fall forever; the market always rebounds from despair. Stocks that are severely undervalued often bounce back after significant declines—that’s the opportunity.

He mainly looked at the deviation rate of the 25-day moving average. For example, if a stock’s 25-day moving average is 100 yen and the current price is 80 yen, the deviation rate is -20%. When the deviation rate shows a large negative value, it indicates the price is seriously undervalued, and it’s time to buy. Conversely, if the deviation rate is +20%, it signals risk. The standards vary for different stocks and industries, and he would set different benchmarks based on the characteristics of large-cap and small-cap stocks. This strategy helped him grow his account from an initial amount to 100 million yen.

In 2003, as the market warmed up, Kotegawa Takashi’s strategy also shifted. He began adopting a trend-following approach, and his assets skyrocketed from 100 million yen to 8 billion. He preferred short-term trades lasting two days and often held 20 to 50 stocks simultaneously, which helped diversify risk and minimize the chance of loss in any single stock. He would buy in during the day, then take profits or cut losses the next morning, quickly switch to new targets, and repeat the cycle.

He was also particularly good at catching stagnant stocks. For example, if one of the four major steel companies started to rise, he would watch the other three that hadn’t yet moved and buy those that met his criteria, thus riding the entire industry’s upward wave.

CIS’s method isn’t as specific, but his trend-following principles complement Kotegawa Takashi’s strategies well. CIS believes that stocks that rise consecutively are likely to continue rising, and those that fall continuously are likely to keep falling. It sounds simple, but many people can’t do it.

Most traders see stock price movements as a 50-50 probability game. When a stock rises for a while, they instinctively think it will fall soon. But the market doesn’t operate that way; it actually has strong continuation tendencies. Strong stocks attract more capital, becoming even stronger, while weak stocks become weaker. We must accept the market’s power rather than fight against it.

A common mistake is to buy on dips. When a stock rises rapidly, people fear getting caught at the top and wait for it to fall before buying. But no one knows when that opportunity will come, and in a strong bull market, doing so often causes missed opportunities.

CIS also emphasizes the importance of stop-loss. When a stock you bought starts to decline, the best approach is to cut losses quickly and exit. Increasing position size on losing trades is the opposite logic; adding to losing positions only makes losses worse. What truly matters is not win rate but overall account profitability. Market risks and losses are inevitable; our goal isn’t to avoid failure but to cut losses in time—losing isn’t forbidden, but small losses and big gains are the goal.

His advice to all traders is: don’t blindly trust past rules. The market is a complex dynamic system, and once any rule is widely disseminated, it tends to become invalid quickly. Truly successful traders are often born during major market crashes, economic crises, or turning points. When most people are panicking and at a loss, the market experiences huge volatility, and the greater the volatility, the more hidden opportunities there are. This is when those who can stay calm and act decisively stand out.