Chartered Market Technician (CMT) Level 1 Practice Test

These questions are part of the practice quiz. Start practicing

• What is the typical duration of the presidential cycle in stock markets?
• What is the primary principle behind the saying "Trend is your friend" in technical analysis?
• What defines a whipsaw situation in trading?
• What does semi-strong form EMH state about stock prices?
• What typically occurs during a breakout from a flag pattern?
• How long does it typically take to bring short interest to 0%?
• How are standard triangles characterized in technical analysis?
• What type of trading involves holding positions for several days or weeks?
• What is the definition of a trend in technical analysis?
• What qualifies as a 90% down day (NPDD)?
• What does the term 'look ahead bias' refer to in trading?
• What does the Money Flow Index (MFI) represent?
• What defines a breakout level within a support/resistance zone?
• What does the law of averages imply about large sample sizes in trading?
• What is a typical use of pivot points in trading?
• What is the primary use of bands in trading analysis?
• What do two moving averages signify when they cross each other?
• What does LWMA stand for in moving averages?
• In a double bottom pattern, how does the volume on the left bottom compare to the volume on the right bottom?
• What is the implication of the 80/60 Rule in stock price analysis?
• In which context is the assertion of 'logical (economic theory)' applied?
• What does implied volatility indicate regarding a security?
• What do percentage envelopes represent?
• How does a moving average act in terms of trend determination?
• What characterizes a failure in a breakout?
• Which of the following is a characteristic of point and figure charts?
• What is a defining characteristic of a 'noise trader' in the market?
• What does the principle of "fractal nature" imply in trends?
• What happens to the volume when moving from the left bottom to the right bottom in a double bottom pattern?
• Internal indicators in market analysis are primarily based on which of the following?
• What is referred to as the "period of interest" in technical analysis?
• What defines a pennant pattern in stock trading?
• In the context of market trends, what is essential to confirm before acting on moving average signals?
• What is the requirement for a trend line to be considered valid?
• How does the Bandwidth Indicator help traders?
• In the context of trend analysis, what should be prioritized over volume?
• What is the purpose of speed lines in technical analysis?
• In market analysis, what is a signal generated from the output series when value changes?
• What primarily distinguishes strong form EMH from weak and semi-strong forms?
• According to technical analysis, what is the key driver for pricing?
• Which of the following best describes pegging (linking) in currency exchange?
• In triangle patterns, what is referred to as the apex or cradle?
• When are volume spikes most commonly observed?
• What is the primary purpose of the Elder Force Index?
• How do higher interest rates typically impact stock performance?
• How is the Money Flow Index (MFI) calculated?
• What does a higher value in the Elder Force Index indicate?
• Which options strategy combines two calls and a put?
• When is the primary trend considered confirmed using indexes?
• In trend identification, what is classified as a primary trend?
• External indicators are derived from the market but are NOT known to significantly influence it. Which is an example of an external indicator?
• How do Bollinger Bands account for market volatility?
• What might a nonconfirmation signal during market movements suggest?
• What is the primary use of Moving Averages (MA) in technical analysis?
• What is the implication of a security's gap closing in trading?
• What does a gap indicate in market trading?
• What does a lower high in price trends indicate?
• According to Dow's theory, what happens when conclusions are based on the movement of one average without confirmation?
• What does double divergence involve in market analysis?
• What typically follows a climax according to market behavior?
• What does LIBOR stand for?
• What is the primary function of the yield curve in finance?
• What signifies a breakout in market trends?
• In terms of market indicators, what best describes external indicators?
• What is a key characteristic of a Martingale process?
• What does the stochastics indicator measure in trading?
• What does a "pullback" refer to in market analysis?
• What characteristic identifies a candlestick chart?
• How is the Money Flow Ratio (MFR) calculated?
• What characteristic defines a variable length moving average (MA)?
• What defines a floating rate debt instrument?
• Which of the following is NOT one of the arguments against the Efficient Market Hypothesis (EMH)?
• What is the "January effect" primarily associated with?
• What does the term 'equilibrium' refer to in financial markets?
• What is a primary bull phase characterized by?
• Which term did John Maynard Keynes use to describe the instincts and emotions that influence human behavior?
• What are oscillators designed to determine?
• What is the primary characteristic of a retracement?
• In technical analysis, what do rectangles represent?
• What should traders do when a trend is identified as ending?
• What does slippage typically refer to in trading?
• What is the primary goal of day trading?
• What best describes a flag pattern in stock trading?
• What is a Chandelier Exit designed to do?
• What is the typical outcome of a rising wedge pattern in technical analysis?
• What is the significance of the Misery Index during the late '70s?
• What price movement is typically seen during a secondary trend?
• In the context of trading patterns, what is a triangle pattern?
• LIBOR is primarily used as a benchmark for which type of loans?
• What is the pivot point technique primarily used for?
• In trend analysis, what does a moving average often serve as?
• What primarily drives herd instinct in the market according to trading behavior?
• What does 'representation' refer to in financial analysis?
• What is a pivot low in technical analysis?
• What does a momentum strategy suggest to investors regarding stocks that are rising?
• How is a "throwback" defined in market terminology?
• What categorizes an intraday trend in technical analysis?
• What typically triggers a primary bear phase?
• What does the STARC Band utilize to produce a price band?
• What does a double bottom pattern typically signal?
• What does the failure of averages to reach new highs or lows during a secondary move indicate, according to analysts?
• What type of rules transform input time series into recommended market positions?
• What does momentum in market analysis indicate?
• What characterizes a specialist breakout?
• What does a declining wedge pattern typically indicate?
• What does divergence in technical analysis signify?
• Which of the following describes the high low logic index?
• What does a moving average crossover require to be considered profitable?
• What strategy should traders consider when encountering a stock that has consistently performed well?
• What is the function of a point or percentage filter in technical analysis?
• Who is considered the founder of modern technical analysis?
• What is the main purpose of using a trend line in technical analysis?
• Which of the following is NOT one of the common entry variables in trading patterns?
• What characterizes spot markets?
• What is typically a signal that a bear market could be ending?
• What term describes a gap that occurs along a trend during a price run?
• Which of the following describes the second key to profit from trend analysis?
• How often does the US economy typically suffer a recession, excluding periods of war?
• What condition must occur to identify a valid setup in trading?
• Why is short interest important for potential investors?
• What is the Kondratieff Wave also known as?
• Where are uptrend lines plotted on a price chart?
• What is the average duration of the Business Cycle?
• What is net news impact in the context of market behavior?
• What issue does the drop-off effect in moving averages potentially create?
• What kind of market behavior does a symmetrical triangle indicate?
• According to technical analysis, what are the emotions of traders expected to influence?
• What is a characteristic of a flat yield curve?
• How long should a symmetrical triangle be in duration?
• What principle states that "prices discount everything" in technical analysis?
• What is likely to happen during primary bull phases with regard to speculation?
• What timeframe do flag patterns generally occur over?
• What does an inside bar indicate about market momentum?
• What is the calculation for the positive directional movement (+DM)?
• Seasonal patterns in agriculture and commodities primarily impact what aspect of trading?
• How is testing of significance generally characterized in market analysis?
• What is a channel in technical analysis?
• What constitutes a complete Elliott wave cycle?
• What is the primary purpose of ratio analysis in financial markets?
• What does capitulation in a market context refer to?
• What does a high standard deviation indicate in the context of testing significance?
• What does managing your money in trading primarily help to achieve?
• What characteristic do Bollinger Bands have during volatile market conditions?
• What does an inverted yield curve indicate?
• When is the 30-week moving average considered bearish?
• What is the role of volume in a double bottom pattern?
• What does it mean when a stock price jumps to a substantially different price during trading?
• What does using acceleration factors in Parabolic SAR accomplish?
• What is a cluster in trading patterns?
• What is the primary function of the Yellen put in economic policy?
• What should traders look for to confirm the strength of a symmetrical triangle?
• What is the main purpose of using moving averages in market analysis?
• What is the first key to profiting from a trend according to trend analysis?
• What is typically marked by high volume and a sharp reversal in price?
• What does Parabolic SAR stand for in trading terminology?
• Resistance at a round number is more likely if what condition is met?
• What does excessive feedback in technical analysis suggest?
• What is the main function of entry variables in trading patterns?
• How do currencies typically trade?
• What does the semi-logarithmic scale depict in relation to price changes?
• When assessing a trend line, what is crucial for determining its reliability?
• What is indicated when total quantity bought equals total quantity sold?
• Which of the following is NOT one of the three approaches to market analysis?
• Which of the following statements is true about abnormal trading events in relation to the law of averages?
• Why do currencies trade in pairs?
• What volume characteristic is common at the end of a bull market?
• When does a fixed length moving average initiate a buy signal?
• A random walk theory suggests what about price movements in the market?
• What characteristic does a yield curve typically have?
• What is one characteristic of scalping in trading?
• What are cross rates?
• Debentures are defined as what type of financial instruments?
• What does a price advance halt indicate when accompanied by high volume?
• What does a high level of short interest typically indicate for investors?
• Which of the following is true about the stochastics indicator?
• What is a minimum acceptable Risk Reward Ratio for trading?
• What does a crossover below 0 in the Elder Force Index indicate?
• In what scenario might the Efficient Market Hypothesis be challenged?
• In technical analysis, a series of higher highs and higher lows indicates what?
• What is the structure of a Strip options strategy?
• What does the Measured Rule help to determine in technical analysis?
• Downtrend lines on a price chart are plotted between what points?
• What type of indicator uses historical prices and volume data to analyze market behavior?
• What economic condition is characterized by high unemployment and inflation rates?
• In the context of Efficient Market Hypothesis (EMH), what does weak form imply?
• What indicates an uptrend in price activity?
• What is the primary factor influencing volume spikes at the beginning of a trend?
• Historically, when does the market tend to show the largest upward bias?
• In the context of the MFI, what is a typical price?
• What does single day implied volatility represent?
• What factor typically overshadows volume considerations in trend confirmation?
• What does a line in market price movements indicate?
• The three R's in investment strategy primarily refer to which of the following concepts?
• What does a higher volume at the left bottom of a double bottom pattern indicate?
• How does a limited ATR trailing stop differ from a standard ATR stop?
• What type of market behavior does a whipsaw reflect?
• What is the purpose of the Donchian Channel?
• What is meant by thrust in market analysis?
• What are short-term trends generally defined as in terms of duration?
• How does a Moving Average often behave in relation to price movements?
• What does the concept of mean reversion imply about a stock that has been performing well?
• What does the stochastics indicator primarily help traders identify?
• What kind of signal does a negative divergence provide to analysts?
• What does the term 'oscillator crossover' refer to?
• Which of the following best describes the use of candlestick patterns in trading?
• What trend condition is indicated when prices are declining with high volume?
• Which of the following is a common application of the Measured Rule?
• Which market trend typically reflects the most significant peak in trading volume?
• In technical analysis, what does a Moving Average indicate about price extremes?
• Which concept describes prices that incorporate all information, both public and nonpublic?
• Which of the following is NOT an assumption of technicians?
• What does ATR stand for in the context of the STARC Band?
• In technical analysis, what do speed lines usually indicate?
• In moving average analysis, what indicates a buy signal?
• Which of the following terms refers to the interchangeability of a product with costless conversion?
• When a stock is advancing, what might it encounter at a round number?
• What type of scale is used for a linear representation of price changes?
• How is the bandwidth of a Bandwidth Indicator visualized?
• What does the blue line represent in technical analysis?
• Which chart type displays the closing price to the right and opening price to the left?
• What does the Misery Index combine to measure economic conditions?
• What is indicated by negative divergence in the markets?
• What does an oscillator's range indicate?
• What does breadth measure in market analysis?
• Which value indicates an overbought condition in the MFI?
• What is the concept of confirmation in market analysis?
• What is the duration of a secondary trend?
• What is the indicator of price extreme when using moving averages?
• What is a 'dead cat bounce' often characterized by?
• When is it advisable to utilize volume statistics?
• What impact does fungibility have on markets for identical goods?
• What does an example of candle pattern filtering involve?
• What does 'island reversal' typically refer to in stock price movements?
• What does a breadth line indicate when there is a natural downward bias?
• What typically happens when a long body appears in the same direction as the existing trend on a candlestick chart?
• What is the Yellen put primarily associated with?
• What does a Straddle involve in trading?