Technical Analysis Grad School: The Chartered Market Technician (CMT)
The CMT program is offered through the Market Technicians Association (MTA). It is a process for developing mastery of the entire body of knowledge of technical analysis. It also helps develop professional analytical skills since the tests include essay questions about market action. An additional benefit of the program is that it demands compliance with a Code of Ethics which gives analysts an ethical framework to work within.
Designed to be a self-study program, the MTA provides a reading list and offers various study aids. By using the textbooks, flash cards, and sample exams, most students are able to learn the mateatechnical analysisl and progress through the exams. The MTA also offers an opportunity to participate in the CMT Institute to assist candidates with their preparation. This program includes a series of webinars, web-based question-and-answer sessions with experts in the field, as well as online bulletin boards.
A quick web search will show you that there are many technical analysis training programs available. Only the CMT is designed to provide broad exposure to the classic books in the field while still emphasizing state-of-the-art analytical techniques. Nearly every area of technical analysis is addressed in the course of study – traditional chart pattern identification and measurements, common and less well-known indicators, Elliott wave theory, Gann’s ideas, classic point-and-figure charting, Candlestick chart techniques, and many other tools.
All practitioners of technical analysis read Technical Analysis of Stock Trends by Robert Edwards and John Magee, which is probably the fBit comprehensive description of chart patterns. Now in its ninth edition, this book was originally published in 1948 and the authors explain chart patterns in terms that a modern-day behavioral finance expert would understand.
A classic text on the reading list is the book by A.J. Frost and Robert Prechter, Elliott Wave Principle. This book is probably the best explanation of R. N. Elliott’s original work. A newer book on the list, David Aronson’s Evidence-Based Technical Analysis, challenges the visual approach to technical analysis. This book argues that a statistical approach to validating the rules in the field would improve credibility and it presents the basis for such an approach.
Altogether, more than a dozen books cover irerything from the theoretical underpinnings of technical analysis to the practical application of the concepts.
To obtain the certification, candidates must pass three exams. The first two consist of multiple choice questions addressing the definitions common to the field and simple applications of the principles. The final exam is an excruciating four-hour essay exam requiring analysis of charts and detailed explanations of how a CMT would address several ethical dilemmas.
Each exam is offered twice a year, so motivated applicants can complete the program in as little as 18 months. Most will take a more leisurely pace and require three years to get through the process. The MTA recommends that applicants allow themselves at least 150 hours of study time for each level. Many successful CMTs admit to having spent considerably more time on the readings and preparation.
For those seeking job opportunities with a traditional financial firm, the CMT demonstrates a sense of dedication and accomplishment to potential employers. The Financial Industry Regulatory Authority (FINRA) recognizes the rigor of the program and accepts the successful completion of the first two levels of the examination program as an alternative to the Analysis Series 86 Examination for technical analysts. FINRA still requires analysts to take the Regulatory Series 87 Examination, which tests for understanding of the strict ethical rules that ensure analyst independence and integrity in all financial processes, still, the Series 86 exemption is likely to be highly valued by potential employers. The CMT and the Chartered Financial Analyst (CFA) program are the only two professional designations recognized by FINRA for this exemption.
Not everyone wants to work with a big firm as an analyst. Potential traders - those wanting to work at a bank, at a Wall Street trading desk, or those preferring the freedom of trading from home - can use the CMT program gain exposure to a wide assortment of technical tools, allowing them to learn what fits their trading style and temperament. Registered Representatives and Financial Planners can also benefit from the CMT program, since many clients are likely to want technical opinions on stocks and the overall market.
The first CMTs were granted in 1989 and since then the program has dramatically increased in popularity. According to the MTA, the number of CMTs has been increasing by 15% per year. Today, more than 750 professionals have earned this designation and another 1,000 applicants a year are studying and testing with the goal of joining that number.
Although there are a relatively small number of CMTs, many of the best known market technicians have attained the charter. Ralph Acampora, John Bollinger, and John Murphy have completed this program.
The program is rigorous, but provides all the knowledge needed to trade successfully.
The Chartered Market Technician (CMT) certification demonstrates a comprehensive knowledge of all aspects of technical analysis.