_________________________________________________________________________________________________  
 
 
 
 
 

 
 
 
CMT  Level  1  
Handbook  
Spring  2012  
 Table  of  Contents  
 
CMT  Level  1  Checklist     2      
Introduction   3      
About  the  CMT  Exams   4  
About  the  CMT  
About  the  MTA  
CMT  Exam  Breakdown   5  
Level  1  Topics  
Level  1  Categories  and  Sub-­‐categories  
Registering  for  Your  CMT’s   7  
Registering  with  Your  Testing  Center   8  
Buying  Your  Books   9  
Setting  a  Reading  Schedule   10  
Reading  Plan   12  
Review   20  
Test  Taking  Format  &  Strategy   21  
Exam  Scoring   22  

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CMT  Level  1  Checklist                
 
Read  MTL’s  CMT  Level  1  Guide  to  familiarize  yourself  with  the  entire  process  
Become  an  affiliate  of  the  MTA  
Declare  intent  to  take  CMT’s  and  register  for  CMT  program  
Register  for  your  level  1  exam  
Register  with  your  testing  center  
Buy  your  books  
Set  a  reading  schedule  
Determine  your  reading  plan  
Begin  studying  
Complete  your  reading  plan  
Review  the  material  
Review  exam  format  and  strategy  
Review  question  types  
Practice  with  practice  questions  and  exams  
Know  how  to  get  to  your  testing  center  and  look  up  where  to  park  
Have  pencils,  a  basic  calculator,  and  a  ruler  ready  to  bring  with  you  to  your  exam  
Get  plenty  of  sleep  before  the  exam  

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Introduction  
 
You’ve  signed  up  to  take  your  CMT  exams.  You  have  taken  the  first  step  to  
improving  your  knowledge  of  investing  and  technical  analysis.  The  CMT  exams  offer  almost  
anyone  the  chance  to  learn  a  great  deal  about  technical  analysis  if  they’re  willing  to  put  in  
the  effort.  You  will  become  well  versed  in  avenues  which  you  previously  had  no  knowledge,  
and  you  will  soon  be  able  to  confidently  interpret  the  every-­‐day  occurrences  in  the  stock  
market.  The  MTA  has  designed  the  CMT  process  as  a  self-­‐study  program.  This  is  
advantageous  because  it  allows  candidates  to  study  and  learn  on  their  own  time,  and  in  
their  own  style.  However,  oftentimes  it  leaves  candidates  wondering  what  is  the  best  
method  to  prepare.  This  handbook  was  written  in  order  to  assist  candidates  with  what  we  
feel  are  the  best  methods  to  prepare  for  the  exams.  
  This  handbook  should  guide  candidates  through  the  entire  level  1  examination  
process:  everything  from  registering  to  take  the  CMT  exams  to  being  ready  on  your  test  day.  
It  covers  not  only  studying  and  learning  the  material  but  also  the  best  methods  to  prepare  
and  organize  the  material  in  your  mind.  Your  destination  from  this  point  forward  is  passing  
your  first  CMT  exam.  Think  of  this  guidebook  as  the  roadmap  that  will  get  you  there.  Follow  
it  as  needed,  but  also  rely  on  other  sources  of  CMT  prep  information  along  the  way.  
  We  hope  that  you  will  find  the  information  provided  in  this  handbook  valuable  and  
accurate  as  you  embark  on  your  CMT  adventure.  At  MTL,  our  passion  is  technical  analysis,  
and  we  thank  you  for  letting  us  share  our  work  with  you.  We  would  like  to  personally  wish  
you  the  best  as  you  build  a  lifelong  foundation  of  technical  market  knowledge,  and  on  your  
journey  to  become  a  Chartered  Market  Technician.  
 
 
 
Sincerely,  
 
 

 
 
The  Market  Tech  Lab  Team  

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About  the  CMT  Exams  
 
About  the  CMT  
 
The  Chartered  Market  Technician  or  "CMT"  is  a  professional  accreditation  
developed  by  the  Market  Technician's  Association  (MTA)  designating  comprehensive  
proficiency  in  technical  analysis  in  multiple  financial  markets.  The  completion  of  the  CMT  
level  1  and  level  2  exams  can  qualify  an  analyst  for  a  Series  86  (research  analyst  part  1)  
exemption  from  FINRA.  The  CMT  exams  are  offered  by  the  MTA  every  6  months  and  
candidates  must  pass  each  of  the  three  exams.  The  level  1  exam  is  a  multiple-­‐choice  format  
administered  over  a  PC.  
 
About  the  MTA  
 
The  MTA  is  a  global  professional  body  of  technical  analysts  with  over  4,000  
members  in  over  75  countries.  It  officially  began  as  a  non-­‐profit  organization  in  1973,  and  
continues  to  be  one  today.  The  three  founding  members  of  the  MTA  are:  Ralph  Acampora,  
John  Brooks,  and  John  Greeley.  The  MTA  developed  the  CMT  program  in  order  to  create  a  
global  standard  of  technical  analysis,  with  the  first  CMT  being  granted  in  1989.  There  are  
currently  over  1,000  CMT  charter  holders  in  the  world.  You  have  elected  to  become  part  of  
an  elite  group  of  market  analysts.

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CMT  Exam  Breakdown  
 
Level  1  Topics  
The  general  topics  covered  for  the  level  1  include:  
 
-­‐ Chart  reading  
-­‐ Chart  patterns  
-­‐ Point  and  Figure  
-­‐ Peak  and  trough  analysis  
-­‐ Dow  Theory  
-­‐ Support  and  resistance  
-­‐ Moving  averages  
-­‐ Oscillators  and  indicators  
-­‐ Volume  and  breadth  
-­‐ Candlestick  patterns  
-­‐ Trading  and  investing  strategies  
-­‐ Point  and  figure  analysis  
-­‐ Cycles  and  seasonality  
-­‐ Relative  strength  
-­‐ Group  and  sector  rotation  
-­‐ Sentiment  
 
Level  1  Categories  and  Sub-­‐categories:  
 
The  macro-­‐categories  (in  bold)  and  sub-­‐categories  for  the  exam  are  categorized  as  follows:  
 
General  Principles  
 
1. MTA  Code  of  Ethics  
3. Market  History  
4. Market  Theories  (e.g.  efficient  market  hypothesis,  random  walk;  chaos  
theory;  behavioral  finance)  
5. Rate  Statements  5a.  to  5h.  as  they  pertain  to  knowledge  of  chart  types:  
5a.  Bar  chart  
5b.  Candlestick  
5c.  Line  chart  
5d.  Market  profile  
5e.  Point  and  figure  
5f.  Semi-­‐logarithmic  versus  arithmetic  
5g.  Time  frames  
5h.  Volume/open  interest  
 
Trend  and  Momentum  
 
6. Breadth  
7. Channels,  envelopes  and  bands  

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 8. Cycles  
9. Divergences  and  confirmations  
10. Moving  averages  
11. Open  Interest  
12. Oscillators  
13. Support  and  resistance  
14. Trendlines  
15. Volatility  
16. Volume  
17. Basic  reversal  pattern  analysis  (e.g.,  double  tops;  head  and  shoulders)  
18. Basic  continuation  pattern  analysis  (e.g.,  flags,  pennants)  
19. Additional  pattern  analysis:  
19a.Dow  Theory  
19b.Elliott  Wave  
19c.Gann  
19d.Wyckoff  
 
Sentiment  (Behavioral  Finance)  
 
20. Content  and  application  of  polls  
21.  Sentiment  polls  (example  Investor’s  Intelligence:  Market  Vane,  Consensus  
Inc.,  AAII,  Daily  Sentiment  Index)  
22. Transactional  indicators:  
22a.  Put/Call  ratios  
22b.  Short  selling  
22c.  Margin  debt  
22d.  Insider  activity  
22e.  Commitment  traders  
22f.  Members  and  specialists  activity  
22g.  Mutual  fund  cash  and  cash  flow  
22h.  VIX  
23. Valuation  indicators  (e.g.,  dividend  yields,  PE’s,  price  to  book)  
24. Consumer  confidence  surveys  
25. Asset  allocations  by  different  groups  (e.g.,  bank  trust  departments,  
households)  
 
Trading  Investment  Strategies  
 
26. Hedging  
27. Limit  moves  
28. Liquidity  
29. Margin/leveraging  
30.  Profit-­‐to-­‐risk  profile  
31. Pyramiding/compounding  
32. Stops  
33.    Relative  performance  strength  

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Registering  for  your  CMT’s  
 
Becoming  a  Member  
This  section  covers  registering  to  take  your  CMT  exams,  becoming  an  affiliate  
member  with  the  MTA,  and  signing  up  for  your  level  1  exam.  In  order  for  you  to  take  your  
first  CMT  exam,  you  must  first  become  an  affiliate  member  (there  are  two  types  of  
memberships  –  an  affiliate  is  someone  who  has  yet  to  become  a  full  CMT).  After  you  
complete  all  levels  you  can  achieve  member  status  with  the  Market  Technicians  Association  
and  be  granted  your  CMT  title.  To  become  an  affiliate  member  go  to  www.MTA.org  and  then  
highlight  the  “Membership”  tab.  Select  “Application  for  Affiliate  Status,”  then  fill  out  the  
form.  Alternatively  you  can  highlight  the  “Membership”  tab,  select  “Benefits  of  Joining  the  
MTA”  and  then  click  “Become  a  Member.”  The  fee  for  joining  the  MTA  is  $300  for  your  first  
year,  and  $300  for  each  year  thereafter.  You  must  maintain  your  membership  status  while  
taking  the  CMT  exams  and  every  year  thereafter  while  you  hold  your  CMT.  
Once  you  become  a  member  of  the  MTA,  you  will  receive  a  welcome  packet  and  
access  to  all  of  the  MTA’s  resources.  These  include  access  to:  the  Body  of  Knowledge,  Career  
Development  Center  (with  job  postings  specifically  for  CMT’s),  Educational  Web  Series,  On  
Demand  Video  Archives,  Technical  Analysis  Blogs,  a  newsletter,  an  annual  subscription  to  
the  Journal  of  Technical  Analysis,  and  the  MTA  Library.  Once  you  become  a  member,  you  
can  also  attend  regional  chapter  meetings  in  your  area,  a  great  and  entertaining  way  to  
interact  with  the  technical  community,  broaden  your  technical  knowledge,  and  earn  
continuing  education  (CE)  credits.  
 
Registering  for  the  CMT  Exams  
Once  you’ve  joined  the  MTA,  you  will  need  to  declare  your  intent  to  take  the  CMT  
exams.  Go  to  www.MTA.org  and  highlight  the  “Chartered  Market  Technician,”  then  select  
“Register  for  CMT  Program,”  then  follow  the  onscreen  instructions.  The  fee  for  your  
enrollment  in  the  CMT  program  is  $250.00  and  you  are  given  five  years  from  when  you  sign  
up  to  complete  all  of  your  exams.  Most  candidates  complete  their  exams  within  five  years,  
but  because  of  this  time  limit,  MTL  suggests  you  register  for  the  CMT  program  only  when  
you  are  sure  you  will  be  taking  the  upcoming  exam.  
Now  that  you’re  a  member  of  the  MTA  and  you  have  declared  your  intent  to  take  the  
CMT’s,  you  must  signup  for  your  first  exam.  The  CMT’s  are  offered  only  twice  a  year,  once  
every  spring,  and  once  every  fall.  The  exact  dates  may  vary  but  typically  the  exam  is  around  
the  end  of  October,  or  beginning  of  November  and  the  end  of  April,  or  beginning  of  May.  
Registration  will  open  typically  four  months  before  the  exam  date.  Follow  the  instructions  
from  “Register  for  CMT  Program”  on  the  website  to  add  the  Level  1  exam  to  your  shopping  
cart.  The  fee  for  the  level  one  exam  is  $250,  bringing  the  total  fees,  including  membership,  to  
$800,  broken  down  as  follows:  $300  for  membership,  $250  for  CMT  Registration,  and  $250  
for  the  Level  1  Exam.  Once  you  have  signed  up  to  take  your  exam,  you  are  ready  to  begin  
studying.  If  you  would  like  to  schedule  and  book  your  exam  with  a  testing  center  at  this  
time,  please  see  the  Registering  with  Your  Testing  Center  section  next.  It  may  be  
advantageous  to  do  this  as  soon  as  you  know  you  will  be  taking  your  exam  to  secure  a  spot  
on  your  preferred  date.  
 
In  Summary:  
 
1. Become  a  member  of  the  MTA   3. Register  for  your  CMT  Level  1  exam  
2. Declare  intent  to  take  CMT  exams   4. Register  with  your  testing  center  

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Registering  with  Your  Testing  Center  

 
Go  to  www.Prometric.com  then  select  Market  Technicians  Association.  You  will  be  
prompted  to  enter  your  country  and  state  and  then  will  be  able  to  select  “Schedule  an  
Exam.”  You  will  need  your  MTA  member  number  to  schedule.  Your  member  number  should  
have  been  sent  to  you  in  an  email  and  is  also  listed  on  your  official  MTA  membership  card.  If  
you  are  unable  to  locate  your  member  number,  please  contact  the  MTA.  
 
Select  the  Prometric  center  closest  to  your  location.  Once  you  have  selected  the  
location  you  should  make  sure  you  know  how  to  get  there  or  print  out  directions  
beforehand.  You  should  also  look  up  where  you  can  find  parking.  
 
 

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Buying  Your  Books  
 
The  MTA’s  recommended  reading  list  includes  the  MTA  code  of  ethics  along  with  
four  books.  The  prices  below  are  estimates  for  new  editions.  All  page  references  in  this  
guidebook  and  the  level  1  practice  exam  are  taken  from  the  following  editions.  Additionally,  
the  abbreviations  for  each  as  they  are  referred  to  in  this  guidebook  and  on  the  practice  
exam  are  given  below:  
 
1. Technical  Analysis  of  Stock  Trends,  9th  Ed.  by  Edwards,  Magee,  and  Bassetti  -­‐  
$55  (referred  to  as  TAST)  
2. Technical  Analysis:  The  Complete  Resource  for  Financial  Market  
Technicians,  2nd  Ed.  by  Dahlquist  and  Kirkpatrick  -­‐  $54  (referred  to  as  TA)  
3. Technical  Analysis  Explained,  4th  Ed.  by  Martin  Pring  -­‐  $36  (referred  to  as  
TAE)  
4. The  Definitive  Guide  to  Point  and  Figure  Analysis,  by  Jeremy  du  Plessis  
(referred  to  as  DGPF)  -­‐  $50  with  the  MTA  Special  Discount:  
http://www.updata.co.uk/shop/mtabookoffer.asp    
 
Please  note  that  book  prices  are  estimates  for  new  books  taken  from  Amazon.com  at  
the  time  of  print  (Fall  2011).  You  may  be  able  to  find  paperback  or  used  editions  to  save  
money.  Rather  than  read  each  book  cover  to  cover,  the  MTA  has  graciously  provided  
reading  assignments  of  certain  key  chapters  for  candidates.  The  MTA  Code  of  Ethics  can  be  
found  on  the  assigned  reading  list  .pdf  file  or  here:  
http://www.mta.org/eweb/DynamicPage.aspx?webcode=cmt-­‐recommended-­‐reading  in  
the  level  1  section.  
If  you  are  pressed  for  time  and  want  to  begin  studying  right  away,  MTL  suggests  
starting  with  Technical  Analysis:  The  Complete  Resource  for  Financial  Market  Technicians  
as  it  provides  a  good  foundation  for  further  study.  Once  you  have  all  or  most  of  your  books,  
you  are  ready  to  begin  studying.  Please  see  the  next  sections  for  a  suggested  reading  plan  
and  schedules.  
 
 
 
   
   
 

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Setting  a  Reading  Schedule  
 
  MTL  highly  recommends  that  you  plan  a  reading  schedule  to  make  sure  you  are  on  
pace  with  your  reading  per  day,  and  to  keep  a  consistent  schedule  so  you  will  have  plenty  of  
time  to  review.  It  is  advantageous  to  learn  the  information  at  a  relatively  consistent  pace  to  
prevent  last  minute  cramming.  Most  of  what  you  learn  while  studying  for  your  CMT  level  1  
exam  you  will  need  to  reference  not  only  during  the  following  two  CMT  exams,  but  also  in  
your  professional  or  trading  career.  Therefore  it  is  important  you  build  a  strong  base  rather  
than  cramming  at  the  last  minute  for  your  level  1,  or  you  will  be  forced  to  re-­‐learn  the  
information  while  preparing  for  your  level  2  exam.  This  guide  should  help  you  prepare  a  
balanced  study  approach.  
 
How  to  Set  a  Schedule  
 
• Figure  out  what  days  of  the  week  you  can  study  on  and  what  times.  Refer  to  the  
table  below  and  circle  or  highlight  the  days  and  times  you  are  willing  to  study.  
 
 
Monday   Tuesday   Wednesday   Thursday   Friday   Saturday   Sunday  

Morning   Morning   Morning   Morning   Morning   Morning   Morning  

Afternoon   Afternoon   Afternoon   Afternoon   Afternoon   Afternoon   Afternoon  
Evening   Evening   Evening   Evening   Evening   Evening   Evening  
 
• Figure  out  how  many  days  you  have  from  the  time  you  will  begin  studying  to  the  
date  of  your  exam.  
• Now  out  of  those  days  subtract  the  days  you  want  to  leave  for  review.  We  
recommend  leaving  at  least  one  week  for  review,  but  really  you  should  leave  
yourself  two  weeks  or  more  if  you  can.  
• Refer  to  the  table  below  for  the  total  number  of  pages  you  must  read  for  each  book:  
 
TAST   +  TA   +  TAE   +  DGPF   =  Total  
449   472   536   237   1,694  
 
• Days  until  two  weeks  before  exam?  (2  weeks  left  for  review)  ____________  
• Now  divide  the  total  number  of  pages  that  you  haven’t  read  by  the  number  of  days  
you  have  left  to  read  =  ____________  pages/day  
• Now  you  can  decide  how  you  want  to  break  it  down.  You  should  concentrate  on  
meeting  the  minimum  number  of  pages  per  day  if  you  can  study  daily  or  pages  per  
week  if  you  have  an  inconsistent  daily  schedule.  
• Keep  in  mind  this  is  only  a  guideline  and  there  may  be  days  or  weeks  where  you  fall  
short  or  exceed  your  targets,  and  you  will  need  to  adjust  accordingly.  
• The  example  schedules  below  have  been  designed  to  keep  you  slightly  ahead  of  
pace,  however,  you  will  want  to  adjust  them  according  to  your  own  schedule  and  
how  many  days  you  can  study  per  week.  
 

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Reading  Schedule  #1  
 
Time  until  exam:  Three  months    
Days  until  exam:  90  days  –  14  review  days  =  76  reading  days  
Average  pages  per  day:  22  
Average  number  of  pages  per  week:  156  
Time  for  review:  2  weeks  
 
Example  schedule:  
 
Day   Monday   Tuesday   Wednesday   Thursday   Friday   Saturday   Sunday  
Pages   26   26   26   26   26   26   -­‐  
 
156  pages/week  *  ~11  weeks  =  1,716  pages  (target  exceeded)  
 
Reading  Schedule  #2  
 
Time  until  exam:  Two  months  
Days  until  exam:  60  –  10  review  days  =  50  reading  days  
Pages  per  day:  34  
Average  number  of  pages  per  week:  237  
Time  for  review:  10  days  
 
Example  schedule:  
 
Day   Monday   Tuesday   Wednesday   Thursday   Friday   Saturday   Sunday  
Pages   40   40   40   40   40   40   -­‐  
 
240  pages/week  *  ~  7  weeks,  1  day  =  1,720  (target  exceeded)  
 
Reading  Schedule  #3    
 
Time  until  exam:  Six  weeks  
Days  until  exam:  42  –  7  review  days  =  35  reading  days  
Pages  per  day:  48  
Average  number  of  pages  per  week:  339  
Time  for  review:  7  days  
 
Example  schedule:  
All  days  
Day   Monday   Tuesday   Wednesday   Thursday   Friday   Saturday   Sunday  
Pages   49   49   49   49   49   49   49  
 
339  pages/week  *  5  weeks  =  1,695  (target  reached)  

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Reading  Plan  
 
This  reading  plan  is  meant  to  be  a  guide  for  those  who  want  to  organize  their  
studies  and  learn  comprehensively  by  category.  Market  Tech  Lab  has  found  that  candidates  
prepare  better  when  they  learn  one  thing  thoroughly  before  moving  on,  and  then  reviewing  
it  as  one  topic  when  they  come  back  to  it.  If  it  is  easier  or  beneficial  for  you  to  read  one  book  
at  a  time,  then  by  all  means  follow  your  intuition  or  modify  this  plan.  You  can  choose  to  
follow  this  plan  as  you  begin  studying,  or  you  can  refer  to  it  when  you  want  to  gain  more  
insight  into  a  certain  category  in  your  review.  That  is  the  great  thing  about  a  self-­‐study  
exam.  All  chapters  are  listed  and  grouped  according  to  what  we  feel  is  the  most  logical  
order,  and  each  section  builds  on  the  one  before  and  after  it  in  a  related  way.  As  you  read,  
mark  sections  or  concepts  that  you  have  difficulty  with  so  you  will  better  focus  on  the  
important  topics  when  it  comes  time  to  review.  
 
Introduction  to  Technical  Analysis  
1.) The  Technical  Approach  to  Trading  and  Investing  (TAST)  
2.) Introduction  to  Technical  Analysis  (TA)  
3.) History  of  Technical  Analysis  (TA)  
 
Pages:  TAST  3-­‐7,  TA  3-­‐7,  21-­‐30  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Explain  the  basics  of  technical  analysis  
• Put  modern  technical  analysis  in  context  with  the  historical  framework  and  
background  of  technical  analysis  
• Differentiate  between  technical  and  fundamental  analysis  
 
Chart  Basics  
4.) History  and  Construction  of  Charts  (TA)  
5.) Charts  (TAST)  
 
Pages:  TA  191-­‐213,  TAST  9-­‐12  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Understand  the  advantages  of  reading  price  charts  
• Read  line,  bar,  candlestick  charts,  and  point  and  figure  charts  
• Construct  line,  bar,  candlestick  charts,  and  point  and  figure  charts  
• Differentiate  between  arithmetic  and  logarithmic  scales  in  charts  and  know  when  to  
use  each  
 
Dow  Theory  
6.) The  Basic  Principle  of  Technical  Analysis  –  The  Trend  (TA)  
7.) Dow  Theory  (TA)  
8.) The  Dow  Theory  (TAST)  
9.) The  Dow  Theory  in  Practice  (TAST)  
10.) The  Dow  Theory’s  Defects  (TAST)  
11.) The  Dow  Theory  in  the  20th  and  21st  Centuries  (TAST)  

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 12.) Dow  Theory  (TAE)  
 
Pages:  TA  9-­‐20,  73-­‐84,  TAST  13-­‐54,  TAE  36-­‐49  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Explain  why  the  trend  is  important  to  technical  analysis  
• Differentiate  between  the  different  lengths  and  types  of  trends  
• Understand  how  profit  is  achieved  from  trends  
• Conduct  peak  and  trough  analysis  and  its  explain  its  implications  
• Visualize  the  various  stages  of  bull  and  bear  markets  
• Practice  Dow  Theory  to  determine  the  primary  trend  
 
The  Technical  Analysis  Controversy  
13.) The  Technical  Analysis  Controversy  (TA)  
 
Pages:  TA  31-­‐51  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Explain  why  technical  analysis  went  into  a  period  of  decline  in  the  mid-­‐20th  Century  
• Differentiate  and  understand  the  Random  Walk  and  Efficient  Market  Hypotheses  
• Describe  the  faults  of  the  RWH  and  EMH  
• Counter  the  claims  of  both  hypotheses  with  information  that  supports  the  notion  
that  prices  are  nonrandom  
 
Markets  Overview  
14.) An  Overview  of  Markets  (TA)  
15.) The  Market  Cycle  Model  (TAE)  
16.) Financial  Markets  and  the  Business  Cycle  (TAE)  
 
Pages:  TA  55-­‐72,  TAE  15-­‐35  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Differentiate  between  the  four  different  types  of  markets  and  recall  examples  of  
each  
• Differentiate  between  the  types  of  financial  markets  and  what  is  traded  on  each  
• Determine  the  required  criteria  for  technical  analysis  to  be  practiced  
• Understand  technical  analysis’  role  in  economic  cycles  
 
Trends  and  Trendlines  
17.) Trendlines  and  Channels  (TAST)  
18.) Major  Trendlines  (TAST)  
19.) Trendlines  (TAE)  
20.) Trends  –  The  Basics  (TA)  
 
Pages:  TAST  253-­‐294,  TAE  136-­‐153,  TA  215-­‐245  
 
Outcome  

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After  reading  this  section  you  should  be  able  to:  
• Conduct  trendline  analysis  
• Understand  the  implications  of  trendline  analysis  for  profit  and  risk  
• Explain  the  significance  of  a  trendline  based  on  the  criteria  for  strength  or  weakness  
of  a  line  
 
Formations  and  Patterns  
21.) Important  Reversal  Patterns  (TAST)  
22.) Important  Reversal  Patterns  –  Continued  (TAST)  
23.) Important  Reversal  Patterns  –  The  Triangles  (TAST)  
24.) Important  Reversal  Patterns  –  Continued  (TAST)  
25.) Other  Reversal  Phenomena  (TAST)  
26.) Consolidation  Formations  (TAST)  
27.) Gaps  (TAST)  
28.) Price  Patterns  (TAE)  
 
Pages:  TAST  55-­‐179,  189-­‐230,  TAE  63-­‐97  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Identify  area  reversal  patterns  on  a  chart  and  explain  their  significance  as  well  as  
theory  behind  them  
• Identify  area  continuation  patterns  on  a  chart  and  explain  their  significance  as  well  
as  theory  behind  them  
• Recognize  the  role  that  volume  plays  in  various  patterns  and  in  what  instances  
volume  carries  greater  significance  
• Explain  the  significance  and  types  of  gaps  
 
Short-­term  Patterns  
29.) Short-­‐Term  Phenomena  of  Potential  Importance  (TAST)  
30.) Bar  Chart  Patterns  (TA)  
31.) Short-­‐Term  Patterns  (TA)  
32.) Smaller  Price  Patterns  (TAE)  
33.) One-­‐  and  Two-­‐Bar  Price  Patterns  (TAE)  
 
Pages:  TAST  181-­‐187,  TA  301-­‐339,  365-­‐394,  TAE  98-­‐135  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Identify  short-­‐term  bar-­‐chart  patterns  and  know  how  to  trade  them  
• Identify  one-­‐day  pattern  phenomenon  and  their  significance  on  price  action  
• Understand  the  significance  of  short-­‐term  price  ranges  on  the  direction  of  future  
prices  
 
Support  and  Resistance  
34.) Support  and  Resistance  (TAST)  
35.) Use  of  Support  and  Resistance  (TAST)  
 
Pages:  TAST  231-­‐252,  461-­‐466  
 

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Outcome  
After  reading  this  section  you  should  be  able  to:  
• Explain  the  theory  of  support  and  resistance  
• Identify  areas  of  support  and  resistance  on  a  chart  
• Understand  basic  misconceptions  about  support  and  resistance    
• How  to  make  trading  decisions  using  support  and  resistance  
 
Moving  Averages  
36.) Moving  Averages  (TA)  
37.) Moving  Averages  (TAE)  
 
Pages:  TA  271-­‐298,  TAE  154-­‐178  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Explain  the  differences  between  various  types  of  moving  averages  
• Calculate  various  moving  averages  
• Use  moving  averages  and  bands  for  gathering  more  information  about  price  trends  
• Differentiate  between  moving  averages  and  directional  movement  
 
Group  Rotation  and  Cycles  
38.) Typical  Parameters  for  Intermediate  Trends  (TAE)  
39.) Price:  Group  Rotation  (TAE)  
40.) Time:  Longer-­‐Term  Cycles  (TAE)  
41.) Temporal  Patterns  and  Cycles  (TA)  
42.) Cycles  (TA)  
 
Pages:  TAE  50-­‐62,  352-­‐390,  TA  155-­‐167,  455-­‐484  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Know  and  discuss  the  different  types  of  historical  cycles  and  their  implications  
• Explain  the  basic  principles  of  cycles  such  as  proportionality,  commonality,  and  
variation  
• Recognize  periods  of  sector  and  group  rotation  
• Differentiate  between  seasonality  and  cycles  
 
Candle  Charts  
43.) Candlestick  Patterns  (TA)  
44.) Candle  Charts  (TAE)  
 
Pages:  TA  395-­‐408,  TAE  257-­‐276  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Recognize  the  context  of  candlestick  charts  based  on  their  history  
• Identify  different  types  of  candles  by  their  specific  terminology  
• Identify  candlestick  patterns  and  explain  either  their  bullish,  bearish,  or  neutral  
significances  
• Explain  the  theoretical  basis  for  using  candles  

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Point  and  Figure  Charts  
45.) Introduction  to  Point  and  Figure  Charts  (DGPF)  
46.) Characteristics  and  Construction  (DGPF)  
47.) Understanding  Point  and  Figure  (DGPF)  
48.) Projecting  Price  Targets  (DGPF)  
 
Pages:  DGPF  27-­‐269  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Discuss  the  history  of  point  and  figure  charting  and  put  modern  point  and  figure  
charting  in  context  
• Read  point  and  figure  charts  (1-­‐box,  2-­‐box,  3-­‐box,  and  5-­‐box)  
• Construct  point  and  figure  charts  (1-­‐box,  2-­‐box,  3-­‐box,  and  5-­‐box)  
• Differentiate  the  differences  between  the  types  of  point  and  figure  charts  
• Understand  what  each  type  of  point  and  figure  reversal  box  can  be  used  for  and  
when  to  use  each  
• Describe  how  to  achieve  ideal  parameters  for  point  and  figure  analysis  
• Draw  trendlines  on  point  and  figures  and  understand  the  different  types  of  
trendlines  
• Identify  unique  point  and  figure  patterns  and  their  implications  
• Project  price  targets  through  both  vertical  and  horizontal  counts  
 
Volume  and  Breadth  
49.) Volume:  General  Principles  (TAE)  
50.) Volume  Oscillators  (TAE)  
51.) Breadth  (TAE)  
 
Pages:  TAE  397-­‐460  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Identify  areas  of  significant  volume  and  its  implications  
• Determine  the  quality  of  price  move  based  on  volume  analysis  
• Use  different  types  of  volume  oscillators  and  explain  their  significance  and  
components  
 
Sentiment  and  Behavioral  Finance  
52.) Measuring  Market  Strength  (TA)  
53.) The  Concept  of  Relative  Strength  (TAE)  
54.) Sentiment  Indicators  (TAE)  
 
Pages:  TA  125-­‐154,  TAE  304-­‐321,  485-­‐510  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Explain  the  concept  of  market  breadth  and  how  it  relates  to  price  movement  
• Measure  internal  market  strength    

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 • Use  various  indicators  to  achieve  multiple  perspectives  of  breadth  and  know  the  
significance  and  theory  of  each  
• Understand  how  breadth,  momentum,  and  investor  psychology  is  related  to  market  
sentiment  
• Analyze  the  implications  of  sentiment  extremes  and  explain  the  theory  behind  likely  
price  moves  in  these  scenarios  
 
Momentum  
55.) Momentum  Principles  (TAE)  
56.) Individual  Momentum  Indicators  I  (TAE)  
57.) Individual  Momentum  Indicators  II  (TAE)  
58.) Confirmation  (TA)  
 
Pages:  TAE  179-­‐256,  TA  411-­‐451  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Measure  momentum  with  various  oscillators  
• Describe  the  significance  of  the  concept  of  momentum  
• Differentiate  between  momentum  confirmation  and  divergences  
• Understand  the  composition  of  individual  oscillators  and  remember  their  inventors  
 
Elliott,  Fibonacci,  and  Gann  Analysis  
59.) Elliott,  Fibonacci,  and  Gann  (TA)  
60.) Miscellaneous  Techniques  for  Determining  Trends  (TAE)  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Explain  Fibonacci  numbers,  the  meaning  of  the  ‘Golden  Ratio,’  and  the  Fibonacci  
sequence  
• Use  Fibonacci  numbers  in  retracement  analysis  
• Project  trend  support  and  resistance  levels  using  Gann  lines  
 
Pages:  TA  485-­‐507,  TAE  287-­‐303  
 
Interest  Rates  and  Money  Supply  
61.) Flow  of  Funds  (TA)  
62.) Why  Interest  Rates  Affect  the  Market  (TAE)    
 
Pages:  TA  169-­‐187,  TAE  463-­‐484  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Explain  why  the  flow  of  funds  matters  to  the  stock  market  
• Explain  why  the  level  and  movements  of  interest  rates  matter  to  the  stock  market  
• Know  what  situations  in  flow  of  funds  and  interest  rates  cause  favorable  and  
unfavorable  conditions  for  the  stock  market  

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Trading  Strategy  
63.) Trading  the  Averages  in  the  21st  Century  (TAST)  
64.) Advancements  in  Investment  Technology  (TAST)  
65.) Choosing  and  Managing  High  Risk  Stocks  (TAST)  
66.) Two  Touchy  Questions  (TAST)  
67.) Stop  Orders  (TAST)  
68.) What  is  a  Bottom  –  What  is  a  Top?  (TAST)  
69.) Trendlines  in  Action  (TAST)  
70.) Selection  of  Markets  and  Issues:  Trading  and  Investing  (TA)  
71.) Appendix  B:  Types  of  Orders  and  Other  Trader  Terminology  (TA)  
72.) Applying  Technical  Analysis  to  the  Theory  of  Contrary  Opinion  (TAE)  
73.) Checkpoints  for  Identifying  Primary  Stock  Market  Peaks  and  Troughs  (TAE)  
74.) Automated  Trading  Systems  (TAE)  
 
Pages:  TAST  295-­‐300,  333-­‐354,  401-­‐418,  425-­‐431,  435-­‐445,  451-­‐460,  TA  511-­‐535,  621-­‐
624,  TAE  511-­‐563  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Determine  which  stocks  to  trade  in  
• Determine  where  and  when  to  set  stop  loss  orders  
• Identify  areas  of  likely  tops  or  likely  bottoms  and  know  how  to  trade  them  
• Draw  red  and  blue  trendlines  and  their  parallels  
• Execute  market  orders  
• Understand  the  concept  of  contrary  opinion  and  identify  appropriate  times  to  think  
contrary  
• Explain  the  concept  and  benefits  of  automated  trading  
 
Risk  Management  
75.) Not  All  in  One  Basket  (TAST)  
76.) Balanced  and  Diversified  (TAST)  
77.) Trial  and  Error  (TAST)  
78.) How  Much  Capital  to  Use  in  Trading  (TAST)  
79.) Application  of  Capital  in  Practice  (TAST)  
80.) Portfolio  Risk  Management  (TAST)  
81.) Stick  to  Your  Guns  (TAST)  
82.) Money  and  Risk  Management  (TA)  
83.) Appendix  A:  Basic  Statistics  (TA)  
 
Pages:  TAST  467-­‐468,  577-­‐610,  TA  571-­‐590-­‐619  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Understand  how  leverage  affects  portfolio  risk  
• Explain  why  diversity  in  a  portfolio  helps  minimize  risk  
• Use  the  optimal  f  formula  for  determining  appropriate  position  sizes  relative  to  the  
overall  portfolio  value  
• Know  when  to  abide  by  principles  and  when  to  stand  down  
• Explain  Modern  Portfolio  Theory  and  the  Capital  Asset  Pricing  Model  
 

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Technical  Analysis  in  Various  Markets  
84.) Technical  Analysis  of  Commodity  Charts  (TAST)  
85.) Technical  Analysis  of  Commodity  Charts,  Part  2  (TAST)  
86.) Appendix  C:  Technical  Analysis  of  Futures  Charts  (TAST)  
87.) Technical  Analysis  of  Global  Stock  Markets  (TAE)  
88.) Technical  Analysis  of  Individual  Stocks  (TAE)  
 
Outcome  
After  reading  this  section  you  should  be  able  to:  
• Explain  the  differences  between  using  technical  analysis  in  the  stock  and  futures  
markets  
• Use  technical  analysis  for  commodity  market  analysis  
• Understand  the  implications  of  technical  analysis  in  the  rest  of  the  world  
 
Pages:  TAST  301-­‐317,  639-­‐667,  TAE  564-­‐592  
 
   

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Review  
 
  You  should  leave  yourself  with  ample  time  to  review  –  a  week  or  longer.  
Hopefully  you  have  been  marking  the  areas  and  sections  you  have  found  more  
difficult  than  others.  You  may  want  to  write  up  flashcards  as  you  go  along,  or  
perhaps  outlines.  Alternatively  you  can  bookmark  pages  or  circle  sections  listed  in  
the  reading  plan.  Whatever  the  case,  you  should  be  sure  to  go  back  over  the  sections  
and  make  sure  you  have  a  good  understanding  and  memory  of  the  terms  and  
concepts.  If  you  have  not  followed  the  suggested  reading  plan  in  this  guide,  you  may  
want  to  use  it  for  review  bouncing  from  topics  of  your  choosing.    
 
 
 
   

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Test  Taking  Format  &  Strategy  
 
  The  test  is  administered  by  Prometric.  Prometric  is  a  testing  company  with  multiple  
facilities  –  check  their  website  www.Prometric.com  for  a  location  near  you.  The  CMT’s  are  
administered  on  PC’s  with  Prometric’s  test-­‐taking  software.  The  software  allows  you  to  
mark  questions  so  that  you  can  return  to  them  easily  at  a  later  time.  It  also  keeps  track  of  
the  questions  that  you  leave  blank.  At  any  time  you  have  the  option  to  view  and  return  to  
questions  that  you  either  leave  blank  or  mark.  
  The  level  1  exam  is  120  questions  and  you  will  have  2  hours  to  complete  it.  You  are  
permitted  to  take  a  ruler,  basic  calculator,  and  pencils  with  you.  You  will  be  given  blank  
paper  at  the  testing  site.  
  MTL  recommends  you  go  through  the  exam  first  answering  only  the  questions  you  
know  the  answers  to  quickly.  Any  question  that  you  are  not  sure  about,  or  are  spending  
considerable  time  on,  you  should  leave  blank  and  return  to  it  later.  If  you  feel  relatively  sure  
of  yourself  but  want  to  check  your  work  for  any  question,  mark  that  question  and  then  come  
back  to  it  if  you  have  time  left  at  the  end  –  after  you  attempt  to  answer  the  questions  you’ve  
left  blank.  
  Taking  the  test  in  this  way  will  allow  you  to  score  all  of  the  “easy”  points  in  the  least  
amount  of  time,  and  provide  you  with  more  time  for  the  harder  questions,  but  only  at  the  
end  when  most  of  the  test  has  been  completed.    
   

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Exam  Scoring  
 
The  level  1  exam  is  scored  according  to  four  categories:  
 
1. General  Principles  
2. Trend  and  Momentum  
3. Sentiment  (Behavioral  Finance)  
4. Trading  Investment  Strategies  
 
You  will  be  scored  on  the  amount  of  correct  questions  in  each  category.  For  each  
category  you  will  be  ranked  according  to  the  decile  you  scored  in  relative  to  your  peers.  For  
example,  if  you  were  in  the  top  82%  of  candidates  in  a  given  category,  you  will  receive  an  8th  
decile  rank  for  that  category.  The  four  categories  will  then  be  averaged  to  derive  your  
average  decile  score  for  the  entire  exam.  
You  are  required  to  wait  typically  8  weeks  before  you  receive  your  exam  results.  You  
will  receive  either  a  pass  or  fail  notification.  After  this  point,  you  can  then  request  your  
individual  category  deciles  from  the  MTA  (which  is  recommended)  by  contacting  the  MTA.  
For  sub-­‐categories  within  each  scoring  section,  refer  to  the  Exam  Breakdown  section  
above,  and  best  of  luck  to  you.  
 
 
 

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