There are two legendary traders in Japan's stock market circle: one is respectfully called "God of Trading," Takashi Kotegawa, and the other is known as the "Strongest Retail Investor," CIS. Interestingly, these two experts have known each other for many years, and their experiences are remarkably similar—they both started engaging in trading during college, gradually growing their initial small capital step by step, and eventually became traders managing billions of dollars.

They truly rose to fame during the famous J-COM mistaken order incident. That day, CIS made a hefty profit of 600 million yen, but Takashi Kotegawa was even more impressive—he made 2 billion yen in just 10 minutes, roughly equivalent to 150 million RMB. In Japan’s traditionally low-profile trading community, such achievements are practically legendary.

What’s most interesting is that Takashi Kotegawa, such a master, is willing to openly share his trading logic. His trend-following strategy and CIS’s trading principles have since been studied and refined by countless traders, and they remain applicable even in today’s market environment.

To understand how Takashi Kotegawa transformed from an ordinary retail investor into a billion-yen trader, we need to look at his early contrarian investments. Between 2000 and 2003, during the burst of the internet bubble, global stock markets entered a bear market, and Japan was no exception. Most investors were losing money, and sentiment was extremely pessimistic. But Takashi Kotegawa saw opportunities others missed—he realized that even in a bear market, stock prices wouldn’t keep falling forever. Rebounds would occur, and those severely undervalued stocks often hid within these rebounds.

His method is actually quite simple: 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 significant negative value, it indicates the stock is severely undervalued, signaling a buy. Conversely, if the stock rises to 120 yen and the deviation rate hits +20%, caution is advised, as it may be overvalued in the short term.

After 2003, Japan’s stock market began to recover. Takashi Kotegawa’s strategy also shifted—from picking up bargains to trend-following. This transition caused his assets to skyrocket from 100M yen to 8 billion yen.

His daily trading approach involves short-term trades lasting two days or overnight, holding 20 to 50 stocks simultaneously. The benefits are clear: risk diversification, preventing a single stock’s volatility from destroying the portfolio. He buys stocks and holds them overnight, then decisively takes profits or cuts losses the next morning, immediately switching to new targets. He is especially skilled at leveraging industry linkage effects—if one of the Big Four steel companies rises, he buys the other three that haven’t yet gone up, riding the entire industry’s upward wave.

CIS doesn’t have such a specific methodology, but his core principles are a perfect complement to Takashi Kotegawa’s strategy. CIS believes that most of the time, stocks that continue rising will keep rising, and those that keep falling will keep falling—that’s the essence of trend-following.

Many people make the mistake of treating stock price movements as a 50/50 probability game, thinking that after a rise, a fall is imminent. But in reality, the market itself has strong continuation tendencies. Strong stocks attract more capital and become even stronger; weak stocks grow weaker and weaker. Instead of fighting market forces, it’s better to go with the flow.

Those who buy on every dip are most likely to get trapped. In a bull market, seeing stocks rise high makes people wait for a pullback to buy, but often the pullback never comes, and they miss the entire rally. The same goes for averaging down after losses—if you’ve already judged your position wrong, doubling down is essentially inviting disaster.

CIS emphasizes that traders shouldn’t over-focus on win rates; what truly matters is the overall profitability of the account. Losses are inevitable in the market, but the key is to cut losses promptly and let profits run. He also warns traders not to blindly believe in rigid rules. The market is a complex, dynamic system—once rules are widely disseminated, they tend to lose effectiveness. Truly excellent traders often emerge during market crashes, crises, or turning points because most people are panicking at those times, while a few remain calm and willing to act, standing out from the crowd.

The stories of Takashi Kotegawa and CIS tell us that trading isn’t about some mysterious secret; it’s about following the market, managing risk, and maintaining independent thinking. Of course, investing involves risks, so trade cautiously.