There are several legendary traders in Japan's stock market. Among them, the most famous are BNF and Takashi Kotegawa. Both started trading during their university days, initially with small capital, gradually increasing their assets. They gained sudden attention after the 2005 J-COM misorder incident. On that day, Takashi Kotegawa earned 600 million yen, and BNF made even more, pocketing 2 billion yen in just 10 minutes. Considering the exchange rates at the time, that was a considerable amount of money.

What’s interesting is that, in Japan’s typically modest trading community, these two openly shared their trading philosophies. BNF revealed his rare trend-following strategy, and Takashi Kotegawa shared practical principles of trend-following that have real value. Since then, many traders have studied these and applied them to their own trading.

To understand BNF’s approach, it’s essential to know what he was doing in the early stages. Between 2000 and 2003, global stock markets were depressed due to the burst of the internet bubble. The Japanese market was no exception, and investors were pessimistic. But here’s the key point: even in a bear market, the market doesn’t continue to decline unilaterally. Rebounds emerge from despair, and prices fluctuate up and down. BNF was targeting these rebound moments.

He focused on finding undervalued stocks. He paid attention to stocks with a large negative deviation from the 25-day moving average, aiming to catch rebounds from these points. For example, if the 25-day moving average is 100 yen and the current stock price is 80 yen, the deviation rate is -20%. Such a situation might signal that the price is seriously undervalued. Conversely, if the stock is at 120 yen with a +20% deviation, it could be overheated in the short term. These judgment criteria vary depending on the industry and stock size, but BNF set his own standards tailored to each.

From 2003 onward, the market environment changed. With reforms and global economic recovery, the stock market entered an upward trend, and BNF’s strategy evolved. He shifted from buying at lows to trend-following. This transition caused his assets to jump from 100 million yen to 8 billion yen.

BNF’s style is centered on short-term trading, holding 20 to 50 stocks simultaneously in a single day. This avoids risk concentration in a single stock and spreads risk across multiple holdings. Stocks bought during the day are held overnight, with profits taken or losses cut the next morning. He strictly adheres to this cycle. He also skillfully uses industry correlations. For example, if one steel industry stock starts rising, he looks at other stocks that haven’t yet risen and buys those that meet certain conditions, riding the overall upward wave.

On the other hand, Takashi Kotegawa’s approach is different. Rather than a specific method, he demonstrated principles of trend-following. His thinking is simple: stocks that have been rising consecutively are more likely to continue rising, and stocks that have been falling are more likely to keep falling. Most people see stock fluctuations as a 50-50 game, but the market doesn’t maintain such balance. The strong get stronger, and the weak get weaker—that’s the essence of the market.

A common mistake is to think that a stock that has risen sharply will soon fall. So many people buy during short-term declines. However, in a bullish market, waiting for a dip can cause you to miss the overall trend. No one truly knows when a stock will fall.

Regarding stop-losses: many add to their position after incurring losses. But Takashi Kotegawa clearly states that increasing bets on losing trades usually only enlarges losses. What matters isn’t the win rate but the overall profit of the account. Losses and risks are inevitable in the market. What should be avoided is delaying stop-losses. The goal is to make small losses and large profits.

Both of these traders share a warning: the market is a complex, dynamic system. Widely known rules quickly become invalid. Truly skilled traders often emerge during major collapses or crises. When most people feel helpless and are ruled by fear, the market experiences significant fluctuations. The larger these fluctuations, the more hidden opportunities there are. Remaining calm and acting swiftly are what set apart the few who succeed in such times.