CMT-Level-II Questions and Answers

The first letter or the number of the month is plotted

The number of the month is plotted

The first letter of the month is plotted

The name or the number of the month is plotted

Members only

Affiliates only

CMT candidates

All of the above

To reduce errors in a system

To improve the efficiency of the system

To see how long a pattern takes to form

All of the above statements

Hold long positions

Close out long positions

Close out short positions

Trading decisions cannot be made by using trend lines.

The bands are based on the moving averages of prices

The bands are based on moving averages of prices plus or minus a standard deviation factor

When price equals the upper band it is considered bullish

When prices are above the upper band they are considered to be in oversold territory

Buy or sell as soon as a new column is created on the chart

Close out your trade on the second reversal back in the direction of the original signal

Take small consistent profits, but allow large, windfall profitable positions to run

Buy or sell on pullbacks after initial trade signal

Sentiment indicators

Breadth indicators

Flow of Funds indicators

Cycle indicators

Innovation, Maturity, Consolidation and Decay

Innovation, Consolidation, Decay and Maturity

Innovation, Consolidation, Maturity and Decay

Innovation, Maturity, Decay and Consolidation

A

B

C

None of the above

Summation

Synchronicity

Harmonicity

Alternation

Decisions among asset classes

Decisions among equity market sectors

Decisions among mutual fund

All of the above

There must be a reason for its existence and it must have regular intervals between peaks

There must be confidence that the cycle will continue and it must be synchronized with another cycle

There must be a reason for its existence and confidence that it will continue

There must be a way to forecast it and it must be synchronized with another cycle

Bonds

Bullion

Precious metal

Energy

Volume

Trend

Slope or momentum

Ratio of two prices

the number of contracts traded at each price tick.

the number of contracts traded at each time interval.

the change in open interest during a particular time interval.

the number of recorded price changes during a particular time interval.

It is a time/price reversal system

It always in the market

It only works for trending markets

All of the above

Prices are consolidating but OBV direction has turned higher which indicates accumulation by long term traders.

Negative divergence between price and indicator suggest distribution is taking place at top.

Prices are higher but OBV is sideways which can't be interpreted.

Positive divergence between price and indicator suggest uptrend is weak and near reversal.

3 Black Crows

Dark Cloud Cover

Hanging Man

Shooting Star followed by an Inverted Hammer

Umbrella

Hammer

Doji

Windows

Two-thirds of the outcomes will lie above within one standard deviation of the mean

95% of the outcomes will lie within two standard deviations from the mean

Two-thirds of the outcomes will lie below within two standard deviations of the mean.

Two-thirds of the outcomes will lie either above or below within one standard deviation of the mean

Lagging groups fail to confirm new lows

Leading groups fail to confirm new lows

Relative strength of lagging groups begins to improve

Leading groups make new lows and accelerate to the downside

Open interest

Contract volume

Total volume

Breadth

I & III

I & IV

II & III

II & IV

A

B

C

D

Take profits but be patient with losing positions and give them time to rebound

Buy low, sell high

Be a contrarian and trade against the trend

Always meet margin calls promptly

Is a minor pattern which is rarely seen and has no real significance on either the near or long term

Occurs when price passes through specific levels

Has no significance to a trader of investor

Needs to be confirmed by other indicators

Linear relationship, as the Best Fit line is curvilinear.

Linear relationship, as points fall generally along a straight line.

Non-linear relationship, as points fall generally along a straight line.

Non-linear relationship, as the Best Fit line is curvilinear.

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

Center limit theorem

Histogram

Central limit theorem

All of the above statements

the relation between a portfolio's return and market return.

the relation between a portfolio's volatility and market volatility.

how much an individual stock's return is related to the market return.

how much an individual stock's volatility is related to the market volatility.

Independent thinking

Failure to stay the course

Pride of opinion

Failure to abide by classic trading rules

10

96

48

30

To forecast future price levels

As a timing tool

To hedge other positions

To determine position sizes

Long-term charts are more useful for making trading decisions

Daily price charts allow for a thorough trend analysis

Long-term charts allow for a better assessment of the price trend

Daily price charts allow for a better assessment of the price trend