Recently, I’ve been exploring some historical stories about the Japanese stock market and discovered two very interesting figures. One is BNF, known as the trading god, whose real name is Takashi Kotegawa, and the other is CIS, reputed as the strongest retail investor. These two are not just friends; their experiences are quite similar—they both started trading in college and gradually grew their capital from small amounts to billions of yen.

What left the deepest impression is that they both rose to fame during the famous J-COM order mistake incident. That day, CIS made 600 million yen, but Takashi Kotegawa was even more impressive—he made 2 billion yen in just 10 minutes, which was about 150 million RMB at the exchange rate back then. Such operations are truly legendary in Japan’s traditionally low-profile and conservative trading circles.

Interestingly, these two giants later shared their trading philosophies. Kotegawa once revealed a trend-following strategy, and CIS also shared his principles for trend trading. These ideas have since been studied and applied by many traders.

Regarding Kotegawa’s approach, it’s best to start with his early contrarian investing. Between 2000 and 2003, during the burst of the internet bubble, global stock markets were bearish, and the Japanese market was no exception. Many investors were pessimistic. But he noticed that even in a bear market, prices don’t just keep falling—they fluctuate with rebounds amid despair.

His core idea is that asset prices often deviate significantly from their intrinsic value. He observed the deviation rate of stocks’ 25-day moving average and looked for stocks with a notably negative deviation. 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%. Such severely undervalued stocks, he would buy in anticipation of a rebound. He set different deviation thresholds for different stocks and sectors as entry signals.

By 2003, as the Japanese stock market started to rise, Kotegawa’s method also evolved—this shift caused his assets to jump from 100 million yen to 8 billion. He began adopting a trend-following strategy, riding the market’s upward momentum.

He typically engaged in short-term trades lasting two days and overnight positions, holding 20 to 50 stocks simultaneously to diversify risk. Stocks bought during the day would be sold the next morning for profit or stop-loss, then quickly switch to new targets. He was also skilled at leveraging industry linkages—especially looking for lagging stocks. For example, among Japan’s four major steel companies, if one starts to rise, he would buy the other three that haven’t yet moved, riding the entire industry’s upward wave.

CIS’s approach isn’t as detailed, but his trend-following principles complement Kotegawa’s strategies well. CIS believes that stocks that have been rising continuously are likely to keep rising, and those that have been falling are likely to continue falling. Many people think of stock price movements as a 50/50 game—once they see a stock rising steadily, they expect it to fall soon. But markets actually have strong momentum—winners get stronger, and losers get weaker.

Many investors fear buying during a big rally might trap them at the top, so they wait for a brief dip to buy in. But no one knows if that dip will come, and in a strong bull market, waiting can cause you to miss the entire rally. He also opposes averaging down on losses, believing that if the stock price drops after you buy, the best move is to admit failure and cut losses quickly. Averaging down only enlarges losses.

CIS emphasizes not to blindly trust past rules of thumb. Markets are complex, dynamic systems—once rules are widely circulated, they tend to lose effectiveness quickly. Truly successful traders often emerge during major market crashes, economic crises, or turning points. When most people panic, the market tends to experience huge volatility, and the bigger the volatility, the more hidden opportunities there are. Those who can stay calm and act decisively stand out during such times.

Investing involves risks, and trading should be cautious. The stories and philosophies of these traders are quite thought-provoking, especially in understanding market nature and risk management.