The Nikkei 225 rebounded almost 2 percent on Friday after suffering its worst one-day fall since late May on Thursday, reflecting the extreme volatility in the market.
With these large swings likely to persist in Japanese equities, which are down over 20 percent in less than a month, it would take a brave investor to buy into this market now, but if he did, there could be big gains, strategists told CNBC.
"I'm a worrying bull, I've taken advantage of the sell-off. We think the Japanese stock market is headed higher [but] will have huge volatility," said David Kotok, chief investment officer at Cumberland Advisors.
The recent ups and downs in the benchmark index have prompted Chris Weston, chief market strategist at trading firm IG Markets, to say: "The Nikkei, it's a trade for the brave."
Uncertainty over when the U.S. Federal Reserve will scale back on its bond buying program, which has been a large driver of instability in the market, will continue to keep investors on edge over the coming weeks, said market players.
In addition, investors will also be closely watching how the Japanese government and central bank respond to concerns over Prime Minister Shinzo Abe's long term growth strategy and bond market volatility.
(Read More: Is an Overconfident BOJ to Blame for Market Woes?)
According to Nicholas Smith, Japan strategist at CLSA, instead of panicking, investors should take this opportunity to buy the market on dips, arguing that there is already evidence of "Abenomics" bearing fruit in the form of rising consumer prices, wages and bonuses.
"Why would you panic when there's a bargain sale at the local super market? It's time to fill up your trolley and not to panic and throw everything out," he said.