Kotetsukai Takashi and CIS's Legendary Trading Journey: From Passive Defense to Active Offense

There are two legendary figures in Japan’s trading circle: one is the renowned BNF, whose real name is Takashi Kotegawa, and the other is CIS, hailed as the strongest retail investor. Their growth trajectories are astonishingly similar—both started their trading careers in college, gradually evolving from small beginnings to become master traders managing tens of billions of yen. They are best known for their impressive performance during the J-COM order misplacement incident, which made them famous in Japan’s financial circles. During that event, CIS earned 600 million yen, while Takashi Kotegawa made a profit of 2 billion yen in just 10 minutes, roughly equivalent to 150 million RMB at the time. Their exceptional trading skills stem from a profound understanding of the market’s essence.

Takashi Kotegawa’s Contrarian Investing: Finding Value in Despair

Takashi Kotegawa’s trading career began during the dark days of the internet bubble burst. From 2000 to 2003, global stock markets sank into a bear market, with the Japanese stock market declining steadily and investor confidence shattered. Yet, amidst this pessimism, Takashi saw opportunities others overlooked. His strategy was straightforward: when the public panics and sells off, prices often deviate significantly from the true value of companies. His task was to identify undervalued stocks and profit from their rebound.

This approach seems simple, but executing it requires immense psychological courage. Takashi mainly relied on a technical indicator: the deviation rate of the 25-day moving average. The principle is not complicated—if a stock’s 25-day moving average is 100 yen, but the current price drops to 80 yen, the deviation rate is -20%. When the deviation becomes significantly negative, it usually indicates the price has been severely depressed. He would buy at such moments, waiting for a rebound.

Different stocks and industries have varying characteristics, so Takashi adjusts his interpretation of this indicator accordingly. He considers large caps, small- and mid-cap stocks, and industry traits, tailoring his thresholds. This isn’t a rigid rule but a nuanced understanding of market features. Using this method, he grew his initial modest capital into an account of 100 million yen.

Market Turning Point: Takashi Kotegawa’s Shift from Defense to Offense

2003 marked a turning point in Takashi’s trading career. Driven by structural reforms and global economic recovery, the Japanese stock market began an upward trend. Sharp-eyed, Takashi quickly sensed this change and fundamentally adjusted his trading strategy. This shift was crucial—his account skyrocketed from 100 million yen to 8 billion yen.

During downturns, he focused on picking up bargains; as the market warmed, he decisively followed the trend. This flexible mindset allowed him to remain profitable across different market environments. He adopted a short-term trading style, often holding positions for just two days, while managing 20 to 50 different stocks simultaneously. This might seem aggressive, but it’s a sophisticated risk management approach. By diversifying holdings, he avoided the risk of over-concentration; even if some stocks lost money, gains from others would offset the losses.

Takashi Kotegawa’s Trading Secrets: Targeting Industry Lagging Stocks

Takashi’s understanding of industries goes beyond individual stocks. He excels at leveraging sector correlations, focusing on stocks that lag behind their peers. For example, within the four major steel companies, if one has already started rising, Takashi shifts his attention to the other three that haven’t yet moved. He carefully selects these lagging stocks, waiting for them to follow the upward trend. This way, he rides the entire industry’s rally and gains higher returns by entering at lower prices.

Every day, Takashi follows a strict operation routine: buy target stocks today, hold until the next morning, then quickly decide whether to take profits or cut losses, before swiftly moving to new targets. This cycle repeats, forming an efficient trading system. Throughout, he remains disciplined and uncompromising in his approach.

CIS’s Trading Philosophy: Continuity Is the Market’s Truth

After Takashi established his specific methodology, another legendary trader, CIS, validated the effectiveness of trend-following from a different perspective. CIS doesn’t rely on complex technical systems; instead, his trading principles reveal the market’s fundamental nature. His core insight is straightforward: stocks that are rising tend to continue rising, and those falling tend to keep falling. The market exhibits strong momentum, not a 50-50 probability game as many assume.

Most traders’ logic is flawed. When they see a stock rising steadily, they often think the rally is over and expect a correction. But the market never guarantees such balance. In reality, it functions like a positive feedback system: strong stocks attract more capital, becoming stronger, while weak stocks weaken further. We should accept this market force rather than fight it.

Buying on dips, which sounds clever, often fails in a bull market. When stocks are strong, many traders worry about buying at the top and getting caught, so they wait for a pullback. But no one knows when or how deep that pullback will be. In a true bull market, waiting often means missing the entire rally.

The Art of Stop-Loss: Doubling Down on Losses Leads to the Abyss

Contrary to trend-following, adding to losing positions can be deadly. When a stock you bought starts to decline, the wisest move is to admit defeat and exit quickly. Doubling down on losses—continuing to increase a losing bet—usually results in bigger losses.

Don’t overly rely on win rates. Many traders obsess over their success percentage, but that’s a false metric. What matters is overall account profitability, not individual trades. Market risks and small losses are inevitable. The key is to cut losses promptly—allow small losses but prevent them from becoming large. The secret to long-term profitability is making big wins and small losses.

Market Rules Fail, True Winners Emerge in Chaos

Whether it’s Takashi’s specific methods or CIS’s principles, they share a common warning: don’t trust any fixed rules blindly. Markets are complex, dynamic systems. What works yesterday, once widely adopted, quickly becomes ineffective. Trading requires unique insights and sharp judgment of market changes at all times.

Great traders are often born not in calm years but during crises, crashes, or major market shifts. When most panic and emotions run high, markets unleash enormous volatility. The more intense the volatility, the richer the hidden opportunities. Those who remain calm, rational, and decisive stand out. Takashi and CIS exemplify this—they succeeded in crises by understanding human nature and the market’s core.

Finally, remember: investing involves risks. Trading strategies and principles proven effective historically may lose their edge as environments change. Always base your decisions on thorough research and your risk tolerance.