Question 1

Which of the following point and figure trading techniques limits risk compared to more basic trading rules?

Options :

A : Buy or sell as soon as a new column is created on the chart

B : Close out your trade on the second reversal back in the direction of the original signal

C : Take small consistent profits, but allow large, windfall profitable positions to run

D : Buy or sell on pullbacks after initial trade signal

Answer: D

Question 2

Reversals in point and figure charts:

Options :

A : Are set by convention as all point and figure charts have the same reversals

B : Depend on the investment time horizon of the holder

C : Can change within the same chart

D : Should be less than a week

Answer: B

Question 3

Which of the following is true of the separating lines pattern?

Options :

A : The top of the upper shadow of one candle is at the same price as the bottom of the lower shadow of the other candle

B : The opening price of the second candle equals the opening price of the first candle

C : The two candles have the same color

D : It is a reversal pattern

Answer: B

Question 4

Which of the following is true of Bollinger Bands?

Options :

A : The bands are based on the moving averages of prices

B : The bands are based on moving averages of prices plus or minus a standard deviation factor

C : When price equals the upper band it is considered bullish

D : When prices are above the upper band they are considered to be in oversold territory

Answer: B

Question 5

Which of the following is NOT true in chart interpretation:

Options :

A : A price chart is a representation of human behavior

B : The goal is to find consistent, reliable and logical patterns

C : Chart patterns can be caused by commonly used trading techniques

D : The behavioral aspects of prices are irrational

Answer: D

Free CMT-Level-II Mock Exam – Practice Online Confidently