CPT Trading Strategies & Market Timing

Question 1

What is the primary goal of a trading strategy?

Accepted Answer

To guide consistent and profitable trading decisions

Answer

To automate tax filings.

Answer

To eliminate risk.

Answer

To reduce trading frequency.

Question 2

Which strategy involves holding positions for minutes or seconds?

Accepted Answer

Scalping

Answer

Swing trading

Answer

Day trading

Answer

Position trading

Question 3

What is market timing?

Accepted Answer

Predicting market movements to maximize gains

Answer

Monitoring market news only.

Answer

Investing at random intervals.

Answer

Avoiding entry points.

Question 4

Which is a key feature of swing trading?

Accepted Answer

Capturing short- to medium-term price moves

Answer

Extremely short holding periods.

Answer

Holding long-term positions only.

Answer

Avoiding technical analysis.

Question 5

What does the term 'buy the dip' mean?

Accepted Answer

Buy after a price pullback expecting recovery

Answer

Buy during market peaks.

Answer

Sell low and buy high.

Answer

Hold positions indefinitely.

Question 6

Which indicator is commonly used to time market entries?

Accepted Answer

Moving average

Answer

Debt ratio

Answer

Current ratio

Answer

Tax burden

Question 7

What is a trend-following strategy?

Accepted Answer

Entering trades in the direction of the market trend

Answer

Buying against the trend.

Answer

Trading during flat markets.

Answer

Focusing only on economic news.

Question 8

Which trading style is based on short-term price inefficiencies?

Accepted Answer

Arbitrage

Answer

Trend trading

Answer

Scalping

Answer

Swing trading

Question 9

What is the importance of backtesting in trading strategy development?

Accepted Answer

To validate a strategy’s past performance and viability

Answer

To adjust taxes retroactively.

Answer

To increase volatility.

Answer

To monitor insider activity.