CMT Level II Exam Study Guide (2026)
Everything the CMT Level II Exam (Chartered Market Technician) tests, topic by topic: what each section covers, the facts that come up most, and how to study it. Pair it with the free 15-question practice test.
The exam at a glance
| Questions | 170 multiple-choice questions (150 scored, 20 unscored trial items) |
|---|---|
| Time | 4 hours |
| Passing score | Not published. The CMT Association sets a scaled passing standard; practise to 70% or higher |
| Format | Closed book, computer-based |
| Certifying body | CMT Association |
| Test provider | Prometric (test center or ProProctor remote proctoring) |
Mind map: the whole exam on one screen
Read the complete CMT Level II study notes for “Chart Patterns and Trend Analysis in Practice”
Our first full set of comprehensive notes, about 14 minutes of reading: Confirmation comes before conviction · Measured moves · When patterns fail · Trend analysis on more than one chart, a worked exam example, the traps examiners use and a one-minute recap. Create a free account to read it and see how premium notes work before you decide.
1. Chart Patterns and Trend Analysis in Practice
Applying patterns and trend tools to real charts: confirmation, failure, measured moves and what volume adds. Level II expects you to judge, not just name, a pattern.
Key facts
- Patterns are only complete on a confirmed breakout, ideally a close beyond the boundary on expanding volume.
- Failed patterns are signals too: a breakout that reverses back into the pattern often leads to a fast move the other way.
- Measured moves give a minimum target, not a forecast of exactly where price stops.
- Trend strength shows in the slope and spacing of higher highs and higher lows; a broken trendline means the trend has slowed, not necessarily reversed.
- Pullbacks to a broken level (a 'retest') offer lower-risk entries with a clear stop.
- Multiple time frames: use the longer chart for direction and the shorter one for timing.
Flashcards
Exam tip: When two pieces of evidence disagree, the best answer usually waits for confirmation or reduces risk rather than acting on one signal.
2. Indicators, Confirmation and Divergence
Using oscillators and volume to confirm or question price action: divergences, range shifts, failure swings and volatility bands.
Key facts
- Bearish divergence: price makes a higher high, the indicator a lower high. Bullish divergence is the mirror image.
- RSI ranges shift with the trend: roughly 40-80 in bull markets and 20-60 in bear markets.
- A failure swing (Wilder) is an RSI reversal that fails to reach its prior extreme, then breaks its intervening point.
- Bollinger Band squeezes (very narrow bands) mark low volatility that often precedes a large move, without saying which way.
- MACD histogram changes direction before the MACD line crosses its signal line, giving an earlier but noisier signal.
- Average True Range (ATR) measures volatility, not direction, and is used for stops and position sizing.
Flashcards
Exam tip: Divergences warn; they don't time the turn. Look for the answer that pairs a divergence with a price confirmation.
3. Cycles, Elliott Wave and Sentiment
Counting waves in practice, Fibonacci relationships between waves, cycle analysis and reading sentiment extremes.
Key facts
- Common wave relationships: wave 3 often 1.618 times wave 1; wave 5 often equals wave 1 when wave 3 extends.
- Corrective patterns: zigzag (5-3-5), flat (3-3-5), triangle (3-3-3-3-3), and combinations.
- Wave 2 often retraces deeply (50-61.8%); wave 4 is usually shallower (around 38.2%).
- Cycles are measured trough to trough; left or right translation shows whether the peak came early or late in the cycle.
- Sentiment is contrarian only at extremes: very bearish put/call ratios or surveys are often near bottoms.
- Commitments of Traders data separates commercial hedgers from large speculators; commercials are often viewed as the 'smart money'.
Flashcards
Exam tip: Wave-count questions usually hinge on one rule. Check the three Elliott rules first; they eliminate most wrong counts.
Test yourself on these topics
Take the free 15-question CMT Level II test, then save your results to unlock your Readiness Score and the mistakes bank.
4. Intermarket and Relative Strength Analysis
How bonds, stocks, commodities and the dollar relate; sector rotation; and measuring relative strength against a benchmark.
Key facts
- Relative strength = security price ÷ benchmark; a rising line means outperformance, whatever the absolute direction.
- In classic intermarket analysis, falling yields (rising bonds) support stocks in disinflationary periods; the link can flip in deflation.
Flashcards
Exam tip: Relative strength questions often include a falling price with a rising RS line. That's outperformance, not weakness.
5. Statistics, System Design and Testing
Regression and correlation, hypothesis testing basics, and building and testing trading systems without fooling yourself.
Key facts
- Correlation shows the strength of a linear relationship; it doesn't prove causation. R² = correlation².
- Curve fitting (over-optimization) makes a system look great on past data and fail on new data.
Flashcards
Exam tip: If a question describes great back-test results with many parameters and no out-of-sample test, the answer is curve fitting.
6. Risk Management, Behavioral Finance and Ethics
Position sizing, stops, risk-adjusted performance measures, the biases that hurt traders, and the CMT ethics standards.
Key facts
- Fixed-fractional sizing: shares = (equity × risk %) ÷ (entry − stop).
- Sharpe uses total volatility, Sortino only downside deviation, Treynor beta.
Flashcards
Exam tip: Position-sizing questions are quick math. Write the formula, plug in the numbers, and double-check the stop distance.
How to pass
- 170 questions in 4 hours is about 1 minute 25 seconds each. Many are chart or scenario questions, so practise reading them fast.
- Expect questions that combine two tools, such as a price pattern confirmed (or not) by volume or momentum. Ask what each piece of evidence says before choosing.
- Know your system-testing vocabulary: curve fitting, out-of-sample testing, drawdown, profit factor and expectancy.
- 20 questions are unscored trial items. Treat every question as if it counts.
Frequently asked questions
How long should I study for the CMT Level II exam?
Most working candidates need 4 to 8 weeks at 45 to 60 minutes a day. Book your exam once your Readiness Score has stayed at 80 or higher for about a week.
Can I take the CMT Level II exam online?
Yes. CMT exams are delivered at Prometric test centers or online through Prometric's ProProctor remote proctoring. Format: closed book, computer-based. Check the current CMT Program Guide for the rules.
What score do I need to pass the CMT Level II exam?
Not published. The CMT Association sets a scaled passing standard; practise to 70% or higher. The exam has 170 multiple-choice questions (150 scored, 20 unscored trial items) and a time limit of 4 hours.
What are the most tested topics?
The outline covers chart patterns and trend analysis in practice, indicators, confirmation and divergence, cycles, elliott wave and sentiment, intermarket and relative strength analysis, statistics, system design and testing, risk management, behavioral finance and ethics. Use the free practice test to see which ones you need most.
The premium CMT Level II study path
Premium CMT Level II prep is studied one topic at a time. Each step starts with that topic's key notes and flashcard deck, then its own question sets of 25, so you master one topic before you move to the next. When every topic is strong, the 6 full mock exams show you're ready.
Your step-by-step study path
- 1Chart Patterns and Trend Analysis in Practice10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25Notes free with an account
- 2Indicators, Confirmation and Divergence10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25Premium
- 3Cycles, Elliott Wave and Sentiment10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25Premium
- 4Intermarket and Relative Strength Analysis10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25Premium
- 5Statistics, System Design and Testing10 key notes, 130 flashcards, then 500 practice questions in 20 sets of 25Premium
- 6Risk Management, Behavioral Finance and Ethics10 key notes, 130 flashcards, then 500 practice questions in 20 sets of 25Premium
- Final step: 6 full mock exams170 questions each, timed like test day. Pass them, then book your exam.Premium
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- 3,000 practice questions + 6 full mock exams per exam
- 800 flashcards + 60 key notes per exam, by topic, plus mind maps
- Spaced repetition + mistakes bank
- Readiness Score & detailed reports
- Video lessons as they release
- Content updates during your access
- 5 bonuses: indicator formula sheet, chart pattern atlas, study planner and more
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Renews once a year until you cancel. We email you before each renewal. Cancel any time from your account; you keep access until the end of the year you've paid for.
Summarized from the CMT Association's official candidate information and the rules cited, checked October 2026. Confirm current requirements with CMT Association.