Takashi Kotegawa Strategy: How BNF Turned $13K into $150 Million

Who Is Takashi Kotegawa (BNF)?

Takashi Kotegawa trader (BNF) or J-Com man was born in 1978 in Ichikawa, Japan. He started focusing on trading at a very young age. with a balance of around $13,600. Over time, he grew his balance and turned it into $153 million, making him one of the most famous retail traders in Japan in the early 2000s, according to Medium.

Takashi never talked about his strategy in any interviews, but he was actively posting on the Japanese forum, like trading screenshots, market analysis, and risk management. Until other traders have gathered the trading information from the forum and reconstructed it as “Takashi Kotegawa strategy.”

What Is the Strategy of Takashi Kotegawa? 

The Takashi Kotegawa strategy is a short-term trading method that focuses on buying stocks that are temporarily on sale and selling them once the price retests, while always managing risk.

Let's break it down into five key factors for Takashi Kotegawa's strategy:

1. To enter the trade

• Rule: Only buy stocks that are below their 25-day moving average or when they touch a resistance level.

• Tip: Focus only on high-performance stock sectors and always wait to confirm the entry with price, volume, or candlestick pattern (such as hammer or engulfing)

Example: If a stock price drops below the 25-day moving average after a strong move and slows down. You should look for a hammer candle with lower selling volume. This shows the selling pressure is weak, so you can enter a small trade.

2. To exit the trade

• Rule: Only sell stocks when the price returns to the 25-day moving average or when it touches a resistance level.

• Tip: If the trade moves against you, use stop losses to exit the trade immediately. Always be flexible with the profit target in response to market volatility.

Example: Traders can enter a trade after a dip and exit the trade when the price moves back to the 25-day moving average.

3. Size position to enter

• Rule: The best position sizing is to risk only 1-2% of your total balance per trade.

• Tip: Always scale your positions every time instead of going all in. Never use high leverage to protect your big losses

Example: Let's say that your account is $100, you can risk $1 - $2 per trade following 1% and 2%.

4. Market conditions

• Rule: If the market is in a downtrend, focus on oversold conditions because the price might rebound. If the market is in an uptrend, focus on well-performing stocks poised to gain quickly.

• Tip: Never enter the trade when the signals are unclear.

Example: If the market is in a downtrend, traders should look for stocks that drop around 20-30% quickly and will bounce back. But if the market is in an uptrend, traders should look for strong sectors to take a small trade.

5. Risk Management

• Rule: Exit the trade to prevent losing big and stay emotionally detached from trading as a skill

• Tip: Always be diverse across sectors to avoid overbuying or selling

Example: If you start losing a trade, close it early instead of hoping.

What Are The Methods of the Takashi Kotegawa Strategy?

The Takashi Kotegawa strategy is simple and requires traders to be disciplined and patient to be successful. The strategy doesn't rely on fundamental analysis; it relies more on pure technical analysis, identifying well-performing stock sectors, and good risk management.

The strategy included these 3 main methods:

1. The 25-day moving average is mostly used in a downtrend market

2. Sector rotation and collection are mostly used in an uptrend market

3. Entry trading type, mix, scaling, and swing trading

Method 1: Use 25-Day Moving Average in the downtrend

Takashi uses the 25-day moving average when the stock market is in a downtrend, taking advantage of the market's extreme oversoldness during the market panic.

What does this method help?

• This method helps you to see the selling price volume.

• Find better short-term price rebound entry opportunities.

• See the market behaviour when traders are emotional.

How does this method work?

• Keep watching the 25-day average price.

• Waiting for the stock to fall around 20-30% below the average price.

• Start entering when the selling pressure is weakening.

• Expect the price to reverse back to the average again.

Method 2: Identify Well-Performing Stock Sector Rotation in an Uptrend

Another method works best in an uptrend. Takashi knows that stocks in the same sectors usually move together, so if one stock rise then the others may follow.

What does this method help?

• It helps you see the market momentum.

• Be able to spot institutions for traders to follow.

• You can catch the short-term moves.

How does this method work?

• Identify well-performing stock sectors

• Choose the leading stock in the sector

• Buy the weaker stock that moves together with another leading one

Method 3: Mixing Entering Styles (Swing Trading + Scaling)

The method shows how he executes the trade, not how he entered it. Since Takashi didn’t use just one method in his strategy, he combined two methods that work in different market conditions.

How does scaling position work?

• Enter with a small amount of position first.

• If you see more confirmation, then enter more positions.

• If the price moves against the trend, it is executed immediately.

How does swing holding work?

• Look for the fast price rebound in the daily timeframe.

• Check the candlestick momentum move.

• Cut the loss immediately if it goes different direction.

What Indicators Does Takashi Kotegawa Use? 

Although Takashi Kotegawa's strategy is simple and not all about complex tool but, applying it with powerful indicators will help you double confirmation even better. These tools, sometimes referred to as BNF indicator or Kotegawa trading indicators, align much better for this strategy.

1. Moving Average (MA)

The 25-day moving average was part of his first method, in which he would look for stocks that had fallen 20-30% below the moving average to identify oversold conditions. It helps you spot temporary pullbacks for better entry consideration.

2. Bollinger Bands

Billinger Bands complement the Moving Average tool well. Takashi’s strategy uses this indicator to gauge market volatility. When the stock price moves below the diverging from the 25-day moving average, it signals potential entry.

3. Relative Strength Index (RSI)

RSI works great when combined with the moving average and Bollinger Bands. RSI is used to confirm the oversold or overbought conditions.

• If the value below 30 = a buying signal

• If the value is above 70 = caution is required

Risk Management in the Takashi Kotegawa Strategy

The reasons Takashi Kotegawa became so successful were his patience and disciplined approach to risk management. Many traders skip this topic, but it’s a strict rule that helped Takashi protect his capital and earn massive profits. 

Here are three Kotegawa risk management rules you should know:

1. Risk only 1-2%: only risk 1-2% of the total capital per trader to ensure the size of the loss doesn’t damage the account.

2. Quickly cut the losses: never let losses run, always cut the trade immediately.

3. Never enter a big trade: Takashi didn’t rely on a single big trade; he always made small trades and gained profit over time.

Understand the Psychology Behind the Takashi Kotegawa Strategy

Takashi Koteganwa’s strategy isn’t based solely on analysing price charts or using indicators; it is built on market behaviour, giving him a full understanding of other traders.

1. Emotional Detachment

• Takashi's trading is detached emotionally from making trade decisions. He treated his trade as an experiment rather than a personal city or loss.

2. Have Probability Mindset

• Sometimes it’s viewed as a part of a statistical game, and not every trade is guaranteed to win. It focuses on possibilities rather than predicting the market.

3. Detach from Money

• Takashi treats money as a tool and not a goal. The detachment allows traders to cut losses quickly and avoid increasing leverage.

4. Market Focused Discipline

• Takashi uses mental as it is technical and always trades with data, not ego. Every trade needs double confirmation, not just guts.

Step-By-Step: How to Use the Takashi Kotegawa Strategy?

To implement Takashi Kotegawa in your own trading, follow this checklist below:

Step 1: Identify the Market Trend

• Identify if the trend is an uptrend or a downtrend.

• Focus on oversold stocks if it’s in a downtrend and a well-performing stock if it’s in an uptrend.

Step 2: Scan for 25-Day MA Deviations

• Look for the price below or near the 25-day moving average.

• Identify price reversal points in downtrends.

• Or use MA to confirm the momentum if it’s in uptrends.

Step 3: Confirm Weaken Volume

• Identity high selling volume after weakening pressure.

• Look for the price expression move showing the smart money activity.

Step 4: Use 1-2% Risk Rule

• Maximum risk traders should take is 2% of their total capital per trade.

• Always set a stop loss every time entering the market.

• Avoild enter the trade based on our emotions.

Step 5: Exit Target

• Set your target profit before entering a trade.

• Sell at the resistance level when the price touch 25-day MA.

• Be caution trading during high market volatility.

Example Trade Breakdown (Full Case Study)

To make sure that the Takashi Kotegawa strategy is actionable, we will walk you through this case study of GBP/USD.

Here’re step by step based on the strategy:

• First set up 5minute EUR/USD chart

• Added the Moving average to the chart

• You will see that the price is above 25 MA, indicating a bullish trend

• High volume confirms the trend if moving forward with the inflation data in the UK

• At 5 minutes, the price is testing the support level with a hammer confirmation.

• RSI on the 5-minute chart, including the overbought

• On the 15-minute chart, the price is moving within an ascending channel, confirming the bullish trend.

• You can buy trade on trade with an entry price of 1.35000 with $100,

• When the price reached 1.35150, then close the trend.

• Always write down in your trade journal.

Advantages and Limitations of Kotegawa Strategy

Using the Takashi Kotegawa strategy has advantages and disadvantages that traders should consider, as it may not work effectively in all market conditions.

Conclusion

The Takashi Kotegawa strategy is a powerful technical analysis approach that relies on discipline and risk management to help you earn bigger profits. Traders can combine Kotegawa’s trading methods with the indicators we’ve suggested above. This system is designed to help you identify high-probability entry trades and control risk. If you are following my steps, you will be able to use this strategy more effectively.