When people think about stock market success, Takeshi Kotegawa often comes to mind. Known for turning a modest amount of money into millions, he’s a legend in the world of day trading. If you’re aiming to follow in his footsteps, here's what you need to know about stock selection, risk management, and the trading methods he used.
1. Choosing the Right Stocks
The first step to success is picking the right stocks to trade. Kotegawa preferred stocks with high volume. High-volume stocks are easier to buy and sell without moving the market too much. Liquidity is key here, you need to be able to enter and exit positions quickly.
Next, look for undervalued stocks. Kotegawa was great at finding stocks that were mispriced, often due to overreactions in the market. These stocks have potential for rapid growth when the market corrects itself. Pay attention to sectors that are volatile or trending. The sectors with news and buzz around them are often full of opportunity.
2. Master Risk Management
Risk management is everything. Kotegawa would cut his losses quickly, not waiting for the market to turn around. You need to have strict stop-loss orders in place to protect your capital. It's not about winning every trade, it's about making sure your losses are small when you're wrong.
Unlike many, he didn't rely heavily on leverage. When he did use it, he kept it small to avoid the risk of blowing up his account. Preserving capital was his priority, and it should be yours too.
3. Use a Proven Trading Method
Kotegawa was mostly a day trader. He profited by taking advantage of short-term price movements. This requires a lot of focus, quick decision-making, and monitoring the market closely. If you're not prepared to watch the market throughout the day, this method might not be for you.
Technical analysis was a big part of his success. He didn't base his trades on gut feeling, but instead on data. Use technical indicators like moving averages, support/resistance levels, and RSI to guide your trades. Chart patterns will give you insight into when to enter and exit positions.
4. Understand Market Sentiment
Kotegawa had an amazing sense of market sentiment. He understood the emotions behind the market and how news could influence stock prices. You’ll need to do the same if you want to succeed. Watch for market reactions to big events, and be ready to make fast decisions when necessary.
News monitoring is critical. The market often overreacts to news, and those overreactions are where the biggest opportunities lie. Kotegawa knew how to capitalize on this better than most.
5. Focus on Risk-Reward Ratios
One of Kotegawa’s rules was to only take trades with a good risk-reward ratio. This means that for every dollar you risk, you should stand to make much more in return. He didn’t chase trades unless he knew the potential reward far outweighed the risk. Many traders fail because they get greedy and enter trades without calculating this ratio.
6. Master the Trading Mindset
To be a successful trader, you need the right mindset. Kotegawa was incredibly patient. He waited for the perfect setups and didn’t rush into trades. It’s important to develop the same level of discipline. Don’t get too emotional or anxious when things aren’t going your way, because the market can sense fear, it seems.
Also, constantly improve your strategy. Kotegawa didn't just wake up one day and become a millionaire trader. He spent years studying the market, learning from his mistakes, and getting better over time.
7. Adapt to Volatility
Kotegawa made some of his biggest profits during times of market volatility. You’ll need to do the same. When markets are unstable, there’s a lot of opportunity if you can stay calm and trade with a clear head.
Learn how to trade both bull and bear markets, because successful traders know how to make money no matter which way the market is moving.
Final Thoughts
If you want to be the next Takeshi Kotegawa, you have to be disciplined, patient, and always learning. Start small, and don’t be afraid to make mistakes—just learn from them. Track your trades and study them so you can improve. Trading is a marathon, not a sprint.
Becoming a legendary trader takes time, dedication, and the right strategy. But if you’re willing to put in the work, there’s no reason you can’t follow in the footsteps of one of the greatest traders of all time.