Technical Analysis

What is the Chartered Market TechnicianĀ® (CMT) Program?

The Chartered Market Technicians Program requires candidates to demonstrate proficiency in a broad range of topics in the field of Technical Analysis. The Program consists of three levels. The CMT Level I and CMT Level II exams are multiple choice while CMT Level III exam is in short answer and essay form.

The objectives of the CMT Program are:

  • To professionalize the field of Technical Analysis
  • To promote high ethical and professional standards
  • To guide candidates in mastering a professional body of knowledge

Those candidates who successfully complete all three levels of the CMT examination and agree to abide by the CMT Association Code of Ethics are granted the right to use the CMT credential.

 

What Skills & Knowledge are tested on the CMT Level I, II, & III exams?

The CMT program includes three levels of examinations:

  • Level I focuses on a basic knowledge of the terminology and analytical tools used in technical analysis.

  • Level II measures the candidate’s competency in the application of concepts, theory, and techniques covered by the required readings.

  • Level III tests the candidate’s ability to integrate his or her understanding of the concepts identified in Level I with the practical application learned in Level II.

The program requires three levels of examination, each building on the previous. The levels progressively narrow in focus while increasing the emphasis on higher-order reasoning.

Although the program will have Wiley Publishing textbooks effective for 2016, all required books for the past exams on all levels can be found on the "Books" tab on top of this guide. These books can be borrowed from the Baruch College Newman Library.

 

What is the Value of the CMT Designation?

The CMT designation demonstrates to clients and potential clients, employers and potential employers, and your colleagues and peers that you are a professional in the field of Technical Analysis.

Passing both the CMT Level I & II exams are important because it qualifies a member for the FINRA Registered Research Analyst (Series 86, Part I ) exemption.

The CMT designation allows you to separate yourself from other professionals in your industry. It is a perfect compliment to your fundamental knowledge of the financial industry.

Visit the CMT site to learn more about the program's Core Body of Knowledge and registration.

Source: CMT Association

The CMT Association

Chartered Market Technicians Association

The CMT Association is a not-for-profit professional regulatory organization servicing over 4,500 market analysis professionals in over 85 countries around the globe. The MTA’s main objectives involve the education of the public, the investment community and its membership in the theory, practice and application of technical analysis.

The CMT has the following stated mission:

  • Attract and retain a membership of professionals devoting their efforts to using and expanding the field of technical analysis and sharing their body of knowledge with their fellow members.

  • Establish, maintain, and encourage the highest standards of professional competence and ethics among technical analysts.

  • Educate the public and the investment community of the value and universality of technical analysis.

The role of a Market Technician

There are several different titles applied to practitioners of the technical approach: technical analysts, chartist, market analyst, and visual analyst. With the increased specialization in the field, it has become necessary to make some further distinctions and define the terms a bit more carefully. Because virtually all technical analysis was based on the use of charts up until recently, the terms “technician” and “chartist” meant the same thing. This is no longer true.

The broader area of technical analysis is being increasingly divided into two types of practitioners, the traditional chartist and, for want of a better term, statistical technicians. Admittedly, there is a lot of overlap here and most technicians combine both areas to some extent. As in the case of the technician versus the fundamentalist, most seem to fall into one category or the other.

Whether or not the traditional chartist uses quantitative work to supplement his or her analysis, charts remain the primary working tool. Everything else is secondary. Charting, of necessity, remains somewhat subjective. The success of the approach depends, for the most part, on the skill of the individual chartist. The term “art charting” has been applied to this approach because chart reading is largely an art.

By contrast, the statistical, or quantitative, analyst takes these subjective principle, quantifies, tests, and optimizes them for the purpose of developing mechanical trading systems. These systems, or trading models, are then programmed into a computer that generates mechanical “buy” and “sell” signals. These systems range from the simple to the very complex. However, the intent is to reduce or completely eliminate the subjective human element in trading, to make it more scientific. These statisticians may or may not use price charts in their work, but they are considered technicians as long as their work is limited to the study of market action.

Even computer technicians can be subdivided further into those who favor mechanical systems, or the “black box” approach, and those who use computer technology to develop better technical indicators. The latter group maintains control over the interpretation of those indicators and also the decision making process.

One way of distinguishing between the chartist and the statistician is to say that all chartists are technicians, but not all technicians are chartists. Although these terms are used interchangeably, it should be remembered that charting represents only one area in the broader subject of technical analysis.

Source: Murphy, John. Technical Analysis of the Financial Markets; (c) 1999.