FREE CMT Level 2 Questions and Answers
Using the Point-and-Figure method what is the standard method used to portray the volume on the chart?
Explanation:
The traditional approach is to add up the volume that occurred while each box was in operation and to represent it on the table. From this, the analyst can visualize quickly where volume occurred in the formation. Using the process, the individual analyst must decide if the information is helpful.
Which of the following is the best combination that results with respect to the volume and pullback in the Diamond Top pattern?
Explanation:
The best combination is when a downward breakout happens on an under-average amount of breakout with no pullback. The failure rate is fairly small at 4%-10%. To some degree, these low numbers correlate with risk.
According to the raw performance statistics which of the following statements predicts the correct when the performance of a broadening pattern at its best and its failure rate?
Explanation:
Raw performance statistics show that the performance of an expanding pattern is at best average and that its failure rate is above average. However, one of the most efficient patterns using an expanding pattern is when it is incorporated into a diamond top with a symmetric triangle.
Which of the following statements is not true about the Diamond Top with regards to pattern analysis?
Explanation:
Diamond is one of the less common, but still lucrative patterns. It consists of a mixture of an increasing pattern and a symmetrical triangle, which typically occurs at the top of a very sharp price increase. It’s uncommon at the bottom of the market.
Which of the following is not a disadvantage of the patterns that are formed by Broadening formations?
Explanation:
For a variety of reasons, expansion shapes are the least useful forms. First, they occur relatively rarely and are often hard to identify. Second, and more importantly, they are hard to make the most of. Because with time the boundary trend lines separate, the breakout
Lines pass away from each other all the time.
If the upper breakout level is getting higher and higher along the upper trend line which of the following statements is not predicted correctly about this trend?
Explanation:
This means the upper breakout level is getting higher and higher along the upper trend line in an upward-breaking broadening pattern. By going higher and higher, it not only uses up much of any possible gain after a breakdown, but it also moves further away from any practical degree of protective stoppage, increasing the risk.
Which of the following methods is not used to portray the volume of trade?
Explanation:
Volume is the number of shares or contracts exchanged in any stock market over a given timeframe, usually a day, but maybe one stock to months or years. Analysts display volume on a price chart in many ways, for instance, Bar/candle, Equivolume, and Point-and-Figure.
Which of the following perfectly describes the pattern of a standard broadening formation with regard to pattern analysis?
Explanation:
The upper trend line slopes upwards in a typical expansion structure and must, therefore, have two peaks the latter higher than the former. Likewise, there must be two troughs in the lower trend line — the latter lower than the former one — and each line must be created at the same time as the other.
If 300 shares traded at a certain price which of the following conclusions can be drawn from this given situation?
Explanation:
If 300 shares were traded at a given price, the traders would record three shares bars to the price. A large number of bars at a given price showed that most operations took place at that level. From this chart, traders could determine the price at which the equalization of supply and demand, and thus the support and resistance zones.
When using the Bar/Candle method to portray volume what is the relationship defined between price and volume using this method?
Explanation:
The most popular volume representation is a vertical bar at the bottom of the price chart which represents the total volume amount for that time. This approach is simple and does not take for granted any direct connection between price and volume. It just shows the details.
Which of the following is the correct description of the law of percentages in the field of decision-making and selection?
Explanation:
With a relative gain of 20 percent, a relative loss of 20 percent may be made back, but an absolute loss of 20 percent requires only a 25 percent gain to split. This is called the “law of percentages.” It implies that all total losses will be held to a minimum when investing.