CMT-Level-II Sample Questions Answers

Relative strength

Difference between price and moving average

Difference between two moving averages

Trident index

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

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.

Put/ call parity

Plurality index

Implied volatility

Standard deviation

Corporate buy backs

Price/earnings ratio

Insider buying

Put/call ratio

Lead to smaller continuation patterns

Frequently leads to a consolidation phase

Will lead to a stronger directional move

Suggest a failure in the longer term pattern

Linearity

Normality

Outliers and homoscedasticity

All of the above

Market has its strongest year during first year of president's term, posts its worst returns during the pre-election year and slightly negative returns in election years

Market has an above average year during first year of president's term, posts negative returns during the pre-election year and its strongest returns in election years

Market has a below average year during first year of president's term, posts its strongest returns during the pre-election year or in the election year

Market has a below average year during first year of president's term, posts its strongest returns in the second year and reasonably strong returns during the pre-election and election years

It using up much of any potential gain after a breakout

It is also moving farther from any realistic protective stop level

It is increasing the risk

It using up much of any potential gain just before a breakout

TRIN

McClellan Oscillator

Ayres-Hughes Breadth Indicator

The SENTIX Index

Head and shoulders

Inverse head and shoulders

Triangle

Double top

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

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.

Saliency

Framing

Sunk-cost

Anchoring

Windows

Rising three methods

Hanging man

Falling three methods

Point and figure

Simple moving average

Swing breakout

N-day breakout

Appear to work poorly because price seems to divorce itself from economics.

Appear to work exceptionally well because of the market's flight to safety.

Function no differently than at any other time in the market cycle because of shortcomings in the measurement procedures.

Suggests the duration of the next downleg in the market cycle

Entering the market too soon

Exiting the market too soon

Abandoning well reasoned trading strategies due to adversity

All of the above

RSI

Stochastic

Oscillators

MACD

It is a reversal pattern

It occurs when the real bodies of two consecutive candles do not overlap

It occurs when the shadows of two consecutive candles do not overlap

One should buy on dips after a falling window

It examines the most recent closing price as a percentage of the price range over a window of time

It is not as sensitive to recent price action as other indicators like Rate of Change

It moves in the same direction as the Williams %R indicator

It works best in a trending market, when it confirms the direction of the primary trend.

January, February and March

March, April and May

June, July and August

October, November and December

Breaking of the centerline

Confirmation from the MACD fast line and signal line

Price action extended above/below the 26 week moving average

The MACD histogram has to record atleast a 200 bar low/high on the first trough/peak

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

The pattern consists of a single candle

The bearish belt-hold is a long black candle that opens on the high and moves lower through the trading session

A short belt-hold line has more significance than a long belt-hold line

The term belt-hold refers to a sumo wrestling maneuver where a wrestler pushes his opponent while holding onto his belt

do nothing because the branch is outside of German jurisdiction.

seek advice from the company counsel to determine appropriate action.

do nothing because the branch is outside of Singapore's jurisdiction.

disassociate himself from the case with a written report to his supervisor.

Point-and-figure charts

Candlestick charts

Bar charts

Line charts

It is considered bearish when a short term moving average crosses above a longer term moving average

In a triple crossover trading system buying is signaled when the shortest term moving average crosses over one of the other moving averages

The first crossover in a triple crossover system during an upside reversal is when the shortestterm moving average crosses above one of the other two averages

Once a moving average system is optimized, it can be used for trading all markets

Sharpe ratio

Calmar ratio

Sortino ratio

Treynor ratio

10-day

12-day

19-day

28-day

Independent thinking

Failure to stay the course

Pride of opinion

Failure to abide by classic trading rules

If there is no overlap among the real bodies of the candles in the pattern

If the last candle closes deeply into the body of the first candle

If there is light volume on the first candle of the pattern and heavy volume on the last candle of the pattern

All of the above

Umbrella

Hammer

Doji

Windows

Phase

Period

Amplitude

None of the above

Narrow the bands

Widen the bands

Utilize a shorter time horizon

Utilize stop loss orders

It is the major sentiment index used for options trading

It is used as a contrary indicator

Extreme levels are trading signals

All 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

A

B

C

None of the above

spread.

regression.

moving Average.

correlation coefficient.

Wave four should not overlap wave one

The theory is composed of time, ratios and wave forms, in that order of importance

The theory was originally applied to individual stocks and does not work as well for indices

The theory works best in commodity markets traded primarily by professional traders such agricultural futures

A very small pattern consisting of two candles that is infrequently seen

A continuation consisting of at least five candles

A bottom reversal pattern consisting of three candles

A top reversal pattern consisting of three candles

Statistical jargon for the typical outcome

The midpoint of a trading range

A popular Elliott Wave guideline

A common pitfall of novice traders

Used as the main confirmation test in Dow Theory

Compares risk to expected returns

Compares actual returns to expected returns

Signals moving average crossovers

take legal counsel

contact industry regulators

provide her supervisor with a copy of the Code and Standards.

review the company's policies and procedures for reporting ethical violations.

Remove price trend

Switch time frames

Use only period extremes

None of the above

Set the time-routine

You need a Risk Management Plan

You need to configure the machine time horizon

Determine what markets to concentrate can be delayed initially

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

They are hard to make the most of the profit

They are often difficult to identify

They are relatively common in occurrence

The breakout lines are moving permanently away from each other

trend-following indicator .

momentum indicator.

breadth indicator.

oscillator

Use of additional trend periods

Increase the delay in taking action after a trade signal is given

Utilize support and resistance lines

Utilize candlestick charts instead of bar charts

Traders could determine the price at which supply and demand were equalized

Traders would record four bars at that price

Traders could determine the support

Traders could determine the resistance zones

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

It has the same form as the shooting star pattern

It comes at the end of a market downtrend

It is a bottom reversal signa

The top of the upper shadow of one candle is at the same price as the bottom of the lower shadow of the other candle

The opening price of the second candle equals the opening price of the first candle

The two candles have the same color

It is a reversal pattern

Under no circumstances is insider trading allowed

The Code of Ethics takes no position on insider trading

Insider trading which violates the laws/regulations of any governmental or regulatory agency is prohibited

Inside information may be disseminated but not acted upon

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

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

It is continuation pattern

The three candles do not have to be on consecutive trading periods

When succes

Amplitude - the height of the wave (cycle)

Period - the time needed to finish one wave (cycle)

Frequency - the number of cycles that repeat every 360°

Phase - a measure of separation between the top and bottom of a wave (cycle)

Volume is not used in futures, only open interest

Contract volume and total open interest are used in bonds

Declining volume and open interest suggest the trend will continue

Increasing volume and open interest suggest the trend will continue

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

Positions of hedgers and speculators

Historical open interest of each contract

Current open interest of each contract

Reportable and non-reportable positions

It centers on the premise that systemic risks in the financial markets can be diversified away.

It is a 45 degree line plotting possible risk versus return

It is a plot of the highest possible returns obtainable over a series of risk levels

It is unrelated to the risk free rate

In the exponential moving average more weight is given to volume on higher volume days

The simple moving average is the geometric mean of previous prices

The linear weighted average addresses the problem of including only the price action covered by the length of the average itself

A shorter term moving average more closely tracks price action

First, make a decision as to how many columns to average.

First, re-draw the chart as a 1X1 chart,

First, find the longest column, and count the number of filled boxes.

First, convert the chart to a conventional line chart.

positive

meaningful

low/negative

moderately positive

Change the charting scale to logarithmic

Increase the time frame on the chart

Change the scale to arithmetic

Add the daily opening prices to provide a more visual benchmark of price changes

Point-and-figure charts

Line charts

Japanese candlestick charts

Bar charts

During the whole bull market

At the early stages of a bull market.

Near the final stages of a bull market.

Both in the beginning and at the end of a bull market

They can be bullish or bearish depending on the market

They are bearish after a rally

They are called hammers after a downtrend

All of the above

Head and shoulders

Wedge

Broadening top

V-bottom

Bonds

Bullion

Precious metal

Energy

The dark cloud cover occurs in the middle of a trading range

During a downtrend, a white real body with shaven head and bottom followed by a black body also with a shaven head and bottom

If the second day of trading opens above a resistance level and then fails

Heavy volume on the second day indicates a buying blow o

10

96

48

30

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

As prices decline, the trading range tends to narrow

Changes in volume precedes price movements

Existing oscillators were limited to a range of 0 to 100

As prices increase, prices tend to be closer to the upper end of the trading range

Remove volume associated with large price moves

Remove low volume periods

Utilize statistical techniques to predict prices based on volume

Construct volume moving averages