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CMT Association CMT Level 1 Sample Questions:
1. Which of the following statements about NH-NL (New High - New Low) line is INCORRECT?
A) It is plotted as a continuous line
B) It is a leading indicator
C) It is overbought above 80 and oversold below 20
D) It is the difference between the number of stocks making new high to those making new lows on a trading day
2. A general rule for risk control in trading is:
A) The total amount risked on any single trade should not exceed 5% of equity
B) The majority of capital should be committed to the strongest market
C) At least 50% of total equity should be dedicated to the market group with the strongest trend
D) Never use stops
3. With respect to moving averages, changes in price trend are identified by:
A) Utilizing a triple-cross method
B) The slope of the moving average
C) Price crossing its moving average, not by a reversal in the moving average
D) A shorter-term moving average crossing a longer-term moving average
4. TRIN index is calculated by:
A) Dividing the advance/decline ratio by the ratio of advancing volume to declining volume
B) Subtracting the 26-day simple moving average from the 12-day simple moving average
C) Subtracting the advance/decline ratio by the ratio of advancing volume to declining volume
D) Dividing total specialist short sales by total short sales
5. The concept that best helps quantify the risk of a trading system is the:
A) Length of average winning trade
B) Maximum cumulative drawdown
C) Maximum favorable excursions
D) Longest flat time
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: A | Question # 3 Answer: C | Question # 4 Answer: A | Question # 5 Answer: B |


