CMT-Level-II CMT Level II Exam Questions and Answers

Switch time frames

Remove price trend

Remove volume trend

Use n period extremes

The doji is an abbreviated method of drawing candles

The open and close are the same

The high and low are the same

Buyers are stronger than sellers

Trendline analysis can be used with MACD

MACD crossover rules are different than other crossover rules

MACD histograms are best used to initiate new positions contrary to the price trend

When the slower MACD line is above the faster line, the MACD histogram will be above zero

Implying that he can guarantee a return.

Stating his past performance as long as it is fact.

Imputing his past performance to future performance.

Implying that he can guarantee a return based on just 2 years of performance.

Moving averages provide the most valid trade signals in sideways markets

Moving averages provide the most valid trade signals in trending markets

Moving averages always provide more valid trade signals than oscillators

Oscillators always provide more valid trade signals than moving averages

a weak price trend.

a strengthening price trend.

greater fluctuations in price.

lack of conviction on the part of traders.

The distance between the two chart tops

The distance between the price level at the first top and the second top

The price change of the move prior to entering the double top pattern

The height of the pattern from the breakdown point

Due to the fact that markets only trend 30% of the time, 100% of capital should be invested at all times

The majority of capital should be committed to the strongest market since it is rare that more than two or more markets will experience a major move simultaneously

Total amount risked on any single trade should not exceed 5% of equity

At least 50% of total equity should be dedicated to the market group with the strongest trend

RSI = 100 - (100/(1 X RS))

RSI = 100 - (100/(100 + RS))

RSI = 100 - (100/(1 + RS))

RSI = 100 + (100/(1 + RS))

Point and figure

Simple moving average

Swing breakout

N-day breakout

Research reports

A free membership to a club

Charting discount coupons

CMT Newsletter

Logarithmic scale

Linear scale

Exponential scale

Arithmetic scale

Open interest

Contract volume

Total volume

Breadth

Sentiment indicators

Breadth indicators

Flow of Funds indicators

Cycle indicators

Opinions are not generally discounted by the market

Stock market news is more important than general news in determining the future direction of the markets

Unexpected news does not get factored into the market

General news reflects slowly unfolding economic and financial trends not yet discounted by the markets

It is even more bearish than the gravestone doji candle

Shooting stars in charts, as in life, are omens of good fortune

The color of the real body is of utmost importance to its significance

It is a bearish reversal pattern

They are longer-term tops and bottom patterns, respectively

The three mountains pattern is also known as a triple top or Buddha top

The three rivers patterns is also known as a triple bottom or inverted Buddha bottom

The color of the real bodies is of utmost importance to its significance

Trade multiple securities in markets with high correlation

Stick to a single trading system

Balance risk across multiple markets and trading systems

All of the above

Upside breakout above an ascending triple top signals sell

Upside breakout above a bullish resistance line signals sell

Downside breakout of a bearish triangle signals sell

Downside breakout below a bearish support line signals buy

Phase

Period

Amplitude

None of the above

The year is displayed at the bottom of the column and the month is not plotted

The year is displayed at the bottom of the column and the number of the month is plotted instead of the X or O

The month is displayed at the bottom of the column and the year is not plotted

The month is displayed at the bottom of the column and the number of the year is plotted instead of the X or O

bonds turn up before stocks and commodities.

stocks turn up before bonds and commodities.

commodities turn up before bonds and stocks.

all the asset classes turn up simultaneously.

Simple trade signals can be used for new commitments whereas complex signals are needed for liquidation purposes

Long positions are closed when they fall below the trend line and short positions are closed when they rise above the trend line

Stop losses should be placed below the last column of Os in an uptrend

All of the ab

Oscillators are least useful when they reach an extreme reading near the upper or lower ends of their boundaries

Divergences between price and oscillators are important confirmation signals

When an oscillator crosses the zero line, it provides an important trading signal in the direction of the trend

All of the above

Are set by convention as all point and figure charts have the same reversals

Depend on the investment time horizon of the holder

Can change within the same chart

Should be less than a week

Triangles are usually second waves preceding a longer third wave

Waves can be expanded into longer waves and subdivided into shorter waves

In the stock market, wave 5 is the most common to extend

The Pythagorean theorem is the mathematical basis for Elliott Wave Theory

Meeting margin calls

Not utilizing stops

Not getting sidetracked by single, counter-trend news events

Most valid buy signals in trading systems occur in the opposite direction of the prevailing trend

Contrary opinion can be used as the sole decision source in entering into new trading positions

Contrarians trade against the consensus even when it is within a normal range

Contrary opinion is more useful in deciding when to exit positions than as a timing tool

Once all long positions have been set, there is diminishing influence by the bulls

TRIN

McClellan Oscillator

Ayres-Hughes Breadth Indicator

The SENTIX Index

a doji breaks a moving average

a dumpling top fails with an abandoned baby pattern

when opposite colored candles have the same close

When same-colored candles have the same close

appear upon completion of star patterns

appear nowhere in star patterns, only in box ranges

ideally has a doji as second real bottom

can only be formed over long periods of time

Head and shoulders

Wedge

Broadening top

V-bottom

Open interest increases during a trending period

Volume may decline but open interest builds during an accumulation phase

Rising prices and declining volume/open interest indicate a pending change of direction

All of the above

Buy when the faster moving average crosses the slower moving average from above.

Buy when the faster moving average hooks the slower moving average from above.

Buy when the faster moving average hooks the slower moving average from below.

Buy when the current price crosses above both moving averages.

Divide the current prices by a moving average of those prices

Create an oscillator that plots a standard deviation of the period lows

Apply volume weighting to both high and lows in the data

Plot a linear regression line through the data midpoin

A trendline from the top of the pattern parallel to the lower trendline

The height of the base of the triangle

Both A. and B. are valid techniques

Neither A. nor B. is a valid technique