CMT Level III study guide
CMT Level III · Work through your exam, one topic at a time.
The Chartered Market Technician® (CMT®) designation is awarded by the CMT Association to professionals who demonstrate mastery of a core body of knowledge of investment risk in portfolio management settings. It is the culmination of a rigorous three-level curriculum that provides market professionals with comprehensive training in technical analysis of financial markets. Level III is the final stage of that three-level program, intended for candidates who already have a firm grasp of the Level I and II material and are ready to apply technical analysis within portfolio management and risk-management contexts. The CMT Association describes technical analysis as a methodology that evaluates financial markets by analyzing statistical patterns in market data such as price movement, volume, and momentum to help forecast potential market behavior and make informed investment decisions. Topics on this exam: Technical Analysis of Financial Markets and Investment Risk in Portfolio Management Settings. The CMT Level III study guide has 2 sections and about 910 words.
01Technical Analysis of Financial Markets: Regime, Relative Strength, and Confirmation
This domain tests whether you can turn chart evidence into portfolio decisions rather than isolated pattern calls. You must identify the market regime, rank opportunities by relative strength, confirm with breadth, intermarket, and sentiment data, and state the invalidation level before acting. The exam rewards a documented, repeatable process and penalizes single-indicator conclusions. Use the 200-day or 40-week moving average for the primary trend, the 50-day for the intermediate trend, and price action for timing.
462 words, about 2 min02Investment Risk in Portfolio Management Settings: Sizing, Stops, and Tail Risk
This domain tests risk as a portfolio-level constraint, not a footnote to a trade. You must translate volatility, drawdown, correlation, and tail risk into position sizes, stop policy, and allocation limits, and recognize when statistical risk measures fail. Volatility targeting. Position size can be scaled by target portfolio volatility divided by asset volatility; higher-volatility assets get smaller weights for the same risk budget.
448 words, about 2 min