Takashi Kotegawa (BNF) – In His Own Words

Takashi Kotegawa entered the spotlight in late 2005, after profiting to the tune of close to $20 million on account of a misplaced sell order by a Mizuho Securities employee.

His TV appearances are not particularly informative, as the main focus appeared to be on his spending habits – or perhaps more accurately, on his lack of interest in spending the vast fortune he had amassed – rather than on the technical aspects behind his trading strategy.

The print interviews he did are more information-rich, and a fairly valuable source of market intelligence.

In this video I went a step further, combining information found in these magazine articles and interviews, with posts by Takashi Kotegawa himself (written under the pseudonym of BNF) on a popular Japanese message board.

These posts, dated October 3 and November 17, 2004, give us a fairly detailed walkthrough of BNF’s 25-day moving average divergence strategy.

This is primarily a bear market strategy and one he mastered right at the start of his trading career, which coincided with the drawn-out fallout following the DotCom bubble crash.

BNF contends that bear markets actually present better profit opportunities: in a rising market long-term holders are the ones who get to capture the bulk of an upward price movement in stocks, as there is a lag before short-term traders monitoring a stock can get in.

His rebound strategy tilts the playing field in favor of short-term operators like himself, allowing for interesting opportunities.

According to BNF, divergence rates are highly contextual, varying from sector to sector and even between groups of stocks within the same industry.

So, for example, in the 2001 bear market, he would place a bid for stocks showing divergence levels of at least 25% – sometimes considerably more for speculative names in the emerging market (MOTHERS).

This threshold is not universal, as in a bull market you might only see divergence levels of 15% or lower, followed by a sharp rebound.

Traders, therefore, need to develop an intuition for these things, both in terms of rebound opportunities, but also to profit from stocks rising in tandem with the Nikkei 225 Index – another strategy of his that I discuss in this video.

Ultimately, it comes down to practice and to many hours watching price movements across a wide range of stocks.

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Sources:
Username: BNF ◆mKx8G6UMYQ Date: Oct. 3, 2004 16:40:18 ID:IdmbGKeE
Username: BNF ◆mKx8G6UMYQ Date: Nov. 17, 2004 21:46:07 ID:yi3qaGEZ
CIRCUS Magazine April 2006 issue
KING Magazine October 2007 issue
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