When it comes to developing technical analysis and charting skills, the Chartered Market Technician (CMT) certification is where it's at. For financial professionals who are considering this option, obtaining this certification shows potential employers that you have a comprehensive knowledge of technical analysis and could put you ahead of the pack in pursuit of that coveted Wall Street job. If you think a CMT certification might help you chart your career course and get it trending in the desired direction, read on to find out what the program entails and what you'll need to do to succeed.
What's a CMT?
The CMT program is administered by the Market Technicians Association (MTA). It aims to develop a technical analysis as well as professional analytical skills. An additional benefit of the program is that it provides a code of ethics and gives analysts an ethical framework to work within. (To read more about finding the perfect job for you, see Is A Career In Financial Planning In Your Future? and Six Steps To Successfully Switching Financial Careers.)
Designed as a self-study program, the MTA provides a reading list and various study aids. Using textbooks, flash cards and sample exams, most students are able to grasp the material and progress through the exams. In addition, the MTA also offers the CMT Institute to assist test-takers with preparation. This program includes interactive webinars, web-based question-and-answer sessions and online bulletin boards.
While there are countless technical analysis training programs available, only the CMT is designed to provide broad exposure to the classic literature in the field while emphasizing state-of-the-art analytical techniques. Almost every aspect of technical analysis is addressed in the curriculum - chart pattern identification and measurements, common and obscure indicators, Elliott wave theory, Gann angles, point-and-figure charting, candlestick charts and other tools. (For more insight, see Exploring Oscillators and Indicators.)
Why Should You Consider This Program?
If you're looking to work in a traditional finance job, the CMT demonstrates accomplishment to potential employers. The Financial Industry Regulatory Authority (FINRA) accepts successful completion of the first two levels of the examination program as an alternative to the Analysis Series 86 examination for technical analysts. While analysts are still required to take the Regulatory Series 87 examination, which tests for understanding of the strict rules that ensure analyst independence, the Series 86 exemption is likely to be highly valued by potential employers. (To learn more about FINRA, read Who's Looking Out For Investors?)
But the CMT isn't just for those who want to work as analysts. Potential traders, those wanting to work at a firm or those preferring the freedom of trading from home, gain exposure to a wide variety of technical tools, allowing them to learn what fits their trading style and temperament. Even registered representatives can benefit from the CMT program, because their clients are likely to want technical opinions on stocks and the overall market. (If you're looking to work from home, see Top 4 At-Home Financial Jobs.)
What the Program Requires
Among the first books on the reading list is "Technical Analysis: The Complete Resource for Financial Market Technicians" (2006), by two CMTs, Charles Kirkpatrick and Julie Dahlquist. This was the first book written as a textbook in the field, and it's designed to teach the foundations of technical analysis in a logical manner. It includes study questions at the end of each chapter; once readers absorb all the material in this book, they will have a solid base of knowledge.
Classic texts, such as "Elliott Wave Principle" (1978), by A. J. Frost and Robert Prechter and "Technical Analysis of Stock Trends" (1948), by Robert Edwards and John Magee, are also included in the readings. Newer, thought-provoking books, including David Aronson's "Evidence-Based Technical Analysis" (2006) and Constance Brown's "Technical Analysis for the Trading Professional" (1999), are presented as part of the program. Altogether, more than a dozen books cover everything from the theoretical underpinnings of technical analysis to the practical application of the concepts. (For more reading on reading, see Ten Books Every Investor Should Read and Books Worth Investing In.)
How Long Does It Take?
CMT certification includes three exams. The first two are in the multiple choice format and the final exam is a grueling four-hour essay exam. Each exam is offered twice a year, meaning applicants can complete the program in as little as 18 months. However, most take three years to get through the process. The MTA recommends allowing at least 150 hours of study time for each level, and many applicants spend considerably more time on the readings and preparation.
An alternative to the third exam is the preparation of a research paper. The standard for this option is high. In order to be accepted for completion of the program, the paper must be fit to publish in an academic journal. Examples of past successful topics include "Optimizing Technical Indicators Using Genetic Algorithms for Pairs Trading" and "Identifying Group Leadership Early: The Edge in Using Investor's Business Daily's 197 Industry Groups."
Benefits and Job Prospects
While the first CMT certifications were granted in 1989, the program has dramatically increased in popularity. In 2009, there are more than 750 professionals who have earned this designation, and about 1,000 applicants a year hope to join that number.
A few of the best-known market technicians have attained this charter: Ralph Acampora, John Bollinger and John Murphy completed this program. (Read more about Bollinger in Using Bollinger Band® "Bands" To Gauge Trends and Profiting From The Squeeze.)
According to the Market Technicians Association, the MTA consists of more than 2,700 market professionals. About two-thirds of the membership reports an annual income of at least $75,000. More than 40% of traders work for investment firms, 5% for hedge funds and a quarter of the membership consists of traders.
The CMT is the only technical analysis training designed by professionals, for professionals. The program provides the tools investors need to trade successfully on their own, or become a technical analyst. Some of the best minds in the industry have completed this certification, demonstrating its value and increasing its recognition. For those serious about technical analysis, this is a program worth considering because it will not only enhance your knowledge - it should also help you make money.