Recently, I came across people discussing two legendary figures from Japan’s trading world: one is known as the “God of Trading,” Takashi Kotsukawa, and the other is the strongest retail trader, CIS. These two are not only friends—their experiences are quite similar. Both started trading as early as their college days, relied on gradual accumulation, and eventually managed to control hundreds of millions in funds; and both became famous in that well-known J-COM mistaken order incident. That day, CIS earned 600 million yen. Takashi Kotsukawa was even more ruthless—earning 2 billion yen in just 10 minutes, which, converted at the exchange rate at the time, was about 150 million RMB.

What’s interesting is that, in Japan’s low-key and conservative trading community, traders rarely publicly share their reasoning. But Takashi Kotsukawa is an exception—he once leaked a trend-following strategy. In fact, early on he got rich mainly through contrarian investing. From 2000 to 2003, the Internet bubble burst, and global stock markets were in a bear phase—Japan’s market didn’t escape it either, with investor sentiment turning pessimistic. But even in a bear market, prices don’t just drop all the way down; there are always rebounds.

Takashi Kotsukawa spotted these undervalued assets and waited for the rebound before stepping in. He mainly looked at the deviation rate of the 25-day moving average, targeting stocks with particularly large negative values. For example, if a stock’s 25-day line is 100 yen and the current price is 80 yen, then the deviation rate is -20%—which means it’s severely undervalued, so you should buy. With this approach, he built up his capital from 100 million yen onward.

By 2003, the Japanese stock market began to reverse upward. Takashi Kotsukawa’s method changed along with it, and that shift caused his assets to surge to 8 billion yen. He started using a trend-following strategy: every day, he held 20 to 50 stocks at the same time, doing short-term trades lasting two days and one night. The next morning, he would close positions or cut losses, then immediately switch to new targets. He was especially good at catching sector linkages—for instance, among the four major steel companies, if one started to rise, he would buy the other three that hadn’t moved yet, riding the entire sector’s swing.

CIS’s trend-following principles actually served as a strong complement to this strategy. He believed that stocks that keep rising are likely to continue rising, and stocks that keep falling are likely to keep falling. Most people see a stock rise for a while and think it’s time for it to drop, but the market itself doesn’t have this kind of balance—it instead has a strong tendency for continuation. Strong stocks attract more investors, the strong get even stronger, and the weak get weaker. We need to accept the market’s power, not fight against it.

Many people like to buy when prices dip, but CIS says that idea should be avoided as much as possible. In a strong bull market, waiting for a brief pullback to enter often means you end up missing the entire move. On the contrary, adding to positions after losses is even more something to avoid—adding bets to trades that have already failed only makes losses grow larger and larger. What truly matters isn’t win rate, but overall returns; the way to go is to cut losses small and take gains big.

CIS also reminds all traders not to worship any so-called “golden rules” from the past. The market is a complex, dynamic system. Once a set of rules is widely spread, it becomes ineffective. Truly great traders are often born during stock crashes, crises, or turning points. When the vast majority of people panic, a small number of those who can stay calm and act decisively manage to stand out. The greater the volatility, the more hidden opportunities there are.