Recently, I was studying the legendary traders in the Japanese stock market and came across a pretty interesting story. In the Japanese trading circle, there are two top experts: one is Takashi Kotegawa, nicknamed the God of Trading BNF, and the other is CIS, known as the strongest retail trader. These two are not only longtime friends but also have quite similar experiences.

Both started engaging in trading during college, gradually growing their capital from small amounts to over hundreds of millions, and both became famous from the famous J-COM order mistake incident. That day, CIS directly made 600 million yen, but BNF was even more ruthless—he made 2 billion yen in just 10 minutes, which at the time exchange rate was about 150 million RMB. This achievement is considered legendary within Japan’s conservative trading community.

Takashi Kotegawa’s trading approach is particularly worth studying. In his early days, he mainly relied on contrarian investing, starting around 2000 to 2003 during the burst of the internet bubble. At that time, global stock markets were crashing, and the Japanese market was no exception; investor sentiment was extremely pessimistic. But BNF saw an opportunity—he looked for stocks that were severely undervalued, and during the rebound after the big drop, he stepped in. This strategy allowed his account to grow from small beginnings to 100 million yen.

His specific method was to observe 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 drops to 80 yen, the deviation rate is -20%. When the deviation rate shows a large negative value, it indicates the price is undervalued. Takashi Kotegawa would buy at this point. He sets different benchmarks for different stocks and industries to avoid blind trading.

In 2003, the Japanese stock market started to reverse and rise, and Takashi Kotegawa’s strategy also shifted. This change was crucial—his assets skyrocketed from 100 million yen directly to 8 billion. From the sluggish period of picking up bargains, he transitioned to trend-following trading, riding the market’s momentum. He usually held positions for two days and nights, typically holding 20 to 50 stocks simultaneously, which effectively diversified risk. The stocks bought each day would be held until the next morning, then either taken profit or cut losses, and quickly switched to new targets.

He is also very skilled at leveraging industry linkage effects, especially in finding lagging stocks. For example, among the four major steel companies, if one starts to rise, he will pay attention to the other three that haven’t yet gone up, thus riding the entire industry’s upward wave.

CIS’s trend-following principle is a different perspective supplement. He believes that stocks that have been rising continuously are likely to keep rising, and those that have been falling are likely to continue falling. Most people see stock price movements as a 50-50 probability game, but the market itself isn’t so balanced; it has a strong tendency to continue. When a stock performs strongly, it attracts more capital, making the strong even stronger and the weak weaker.

A common pitfall many fall into is fearing being caught in a rally after a stock has risen for a while, waiting for a pullback to buy. But in a strong bull market, this waiting can cause you to miss the entire rally. Also, the practice of adding to losing positions—CIS believes that once a judgment is wrong, you should cut losses immediately. Doubling down on losses only makes the damage worse.

He emphasizes not to over-focus on win rate; the key is the overall profitability of the account. Risks and losses are inevitable in the market. Our goal isn’t to avoid failure but to cut losses promptly and turn small losses into big gains.

The final interesting point he makes is: don’t blindly believe in past trading rules. The market is a complex, dynamic system. Once rules are widely spread, they tend to become ineffective. Truly excellent traders often emerge during stock crashes, economic crises, or market turning points. When most people are panicking, the greater the volatility, the more hidden opportunities there are. This is the best time for the few calm and decisive traders to stand out.