What Is the CMT Association?
The term CMT Association refers to the largest and most well-known industry group for technical analysts. The group, which was established as the Market Technicians Association, promotes education and professional development and hosts a symposium each year, at which new advances in the field often make their debut. The association is best known for issuing the Chartered Market Technician (CMT) designation, a rigorous certification program that demonstrates a broad knowledge of the discipline of technical analysis.
- The CMT Association is a financial industry group that brings together professional technical analysts.
- It is the credentialing body that confers the Chartered Market Technician designation.
- The CMT charter is awarded to practitioners of technical analysis worldwide who pass a rigorous self-study program.
- The CMT Association's philosophy is grounded in behavioral economics and extends beyond classical pattern recognition techniques to include quantitative approaches to market research and rules-based trading system design and testing.
- The organization received its nonprofit status in 1973 and is based in New York.
How the CMT Association Works
The CMT Association was established in the 1970s as a way to educate and promote professional standards in the field of technical analysis. According to the organization, technical analysis is a trading discipline that provides investors and professionals with a way to strategize through the perceived or intrinsic value of assets and their market prices.
As noted above, the CMT Association exclusively administers the CMT Program, which is designed to give students access to a comprehensive study of technical analysis. This includes exposing students to theory, practice, and the application of the tools and techniques used in technical analysis. The program is open to existing and new professionals and has three levels that expand students' knowledge and competency in technical analysis.
In addition to the CMT Program, the CMT Association hosts opportunities for continuing education for all its members, with online webcasts, seminars, and many live events at the chapter level. For example, the CMT Association has local chapters in both New York and Boston.
The association also hosts an online Career Development Center, includes access to academic papers and research from other members, and provides networking opportunities. Additionally, the association provides continuing education opportunities through daily, monthly, and annual publications, online webcasts, and seminars.
There are 36 active CMT Association chapters across the globe. Roughly 35,000 students take part in its programs each year. Members are based in 137 different countries.
Individuals who hold the designation must master the many areas of expertise within technical analysis. Topics covered by the CMT examinations include:
- Price-pattern recognition at the market
- Sector and individual security level programmatic trading
- Statistical analysis
- Trading management
- Behavioral finance
- Trading-systems testing
The program also incorporates an emphasis on ethical behavior and involves three exams. Each covers specific areas within the field and requires hundreds of hours of study. Those who pass all three tests become CMT Charterholders, a designation that reflects their knowledge of financial markets, price behavior, timing, and risk management.
The CMT Program is comprehensive and exposes students to all aspects of technical analysis. Through the program’s teachings, students learn to make emotionless decisions in the markets and to incorporate many types of analyses when designing trading systems, or simply trading individual securities.
The CMT Program typically takes about two-and-a-half or three years to complete, although those who already hold a CFA designation can skip the first of the three CMT tests and complete the required tests in roughly two years.
History of the CMT Association
As noted above, the CMT Association was established in the 1970s to bring together professional technical analysts. The organization, which is based in New York, started out as a group of sell-side professionals on Wall Street as the Market Technicians Association. It secured its status as a nonprofit organization (NPO) in 1973 with a total of 18 members. The organization's first certification program began in the mid-1980s. It wasn't until 1989 that the first CMT graduates were certified. The association now has more than 4,500 members across the world.
CMT Association vs. CFA Institute
The CMT Association is fairly new when you compare it to the CFA Institute, which has been around a lot longer. Established in 1947, the CFA Institute is a global financial organization for investment management professionals. It provides members with educational opportunities, a code of ethics, and certification programs.
The Chartered Financial Analyst (CFA) designation is perhaps one of the most sought-after and most recognized financial certifications offered by the organization. This program is aimed at fundamental analysts. Candidates must pass three exams in order to receive certification. Individuals must have some experience before taking part in the program. It covers a wide variety of areas, including (but not limited to):
- Corporate finance
- Ethical and professional standards
- Financial reporting
- Portfolio management
The institute also offers a number of other designations, including a certificate in environmental, social, and governance (ESG) investing and the Certificate in Investment Performance Measurement.
Many more students sit for the CFA tests than the CMT tests even though the two are similar. And although the CMT designation isn't as well-known as the CFA, a growing number of analysts are embracing the combination of the two disciplines. This provides them with a way to bring added skills to investing and portfolio management namely around timing and risk management. It also helps them understand how price behavior intersects with security valuations.