Recently, I revisited a legendary story about the Japanese stock market and suddenly realized that some trading wisdom from back then is surprisingly applicable to today’s crypto markets.

Speaking of the Japanese trading scene, there are two legendary figures: one is the trading god called Takashi Kotsukawa, and the other is the top retail trader CIS. Their stories are interesting because both started trading in college and gradually built their capital from small amounts to billions of yen. The most famous incident is the J-COM order mistake, where CIS made 600 million yen in one trade, but Kotsukawa was even more ruthless—he made 2 billion yen in just 10 minutes, which was about 150 million RMB at the time.

In his early days, Kotsukawa actually practiced contrarian investing. Between 2000 and 2003, during the dot-com bubble burst, global stock markets were struggling in a bear market, and the Japanese market was no exception—many investors lost everything. But he noticed that even in a bear market, prices don’t just keep falling; they tend to rebound out of despair. His simple idea was to find severely undervalued stocks and profit from their rebounds. This requires courage and time to do research. He mainly looked at the deviation rate of the 25-day moving average; when the deviation was significantly negative, he would buy. For example, if a stock’s 25-day moving average was 100 yen and the current price was 80 yen, the deviation rate would be -20%, and he would see this as an opportunity.

By 2003, the market environment changed. With reforms and global economic recovery, the Japanese stock market started rising. Kotsukawa also shifted his strategy from picking cheap stocks to riding the trend. This change caused his assets to explode from 100 million yen to 8 billion yen. He often traded short-term positions held for two days, managing 20 to 50 stocks at a time—this diversified risk while capturing multiple opportunities. He was especially good at spotting lagging stocks; for example, if one of the four major steel companies started to rise, he would buy the others that hadn’t moved yet, riding the sector’s wave.

CIS’s approach was more straightforward. He didn’t rely on complex methods, but his trend-following principle complemented Kotsukawa’s strategy well. He believed that stocks that are continuously rising are likely to keep going up, and those that are falling are likely to keep falling. Trading, in his view, is based on this understanding. Most people see stock movements as a 50/50 game—when prices rise too much, they fear a fall. But markets actually have strong momentum; strong stocks attract more capital, becoming even stronger, while weak stocks weaken further. We need to accept this market force rather than fight it.

He emphasized one key point: never wait for a stock to fall before buying. Many people get scared of buying at the high after a strong rally, waiting for a brief pullback, but in a bull market, they end up missing the entire rally. He also disapproves of averaging down on losing positions—if you realize you made a mistake, the smartest move is to admit defeat and cut losses quickly, rather than doubling down on losing trades.

Interestingly, both Kotsukawa and CIS are quite low-profile in Japan’s trading circles and rarely share their ideas openly. However, the strategies and philosophies they’ve shared have been studied and organized by many traders and applied to their own trading. They also warn traders not to blindly believe in past golden rules. Markets are complex dynamic systems; once rules are widely circulated, they tend to lose effectiveness. Truly excellent traders often emerge during major market crashes, economic crises, or turning points because most people are panicking, while a few remain calm, make rational judgments, and act decisively.

These trading insights are still valuable today. Whether in stocks or cryptocurrencies, the fundamental principles of markets are actually similar.