CMT Designation: These 3 Letters Have Made Me a Ton of Money

In 2011, I passed the third and final test required to earn the coveted Chartered Market Technician (CMT) designation.

That’s the “CMT” behind my name.

It may not be as recognizable or prestigious as the “Ph.D.” that follows some academics’ names. But frankly, my CMT designation has helped me make a ton of money in the markets.

My CMT designation gave me the knowledge base to design the Green Zone Ratings system — a simple way for you to look up a stock to see how it ranks based on six key factors.

Like anything worth having, it took a lot of effort to earn those three letters … to gain the market knowledge and experience they embody … to reap the financial rewards they eventually afforded me.

Over an 18-month period spanning 2009 and 2011, I woke at 4 a.m. every workday to get two to three hours of reading in, before my full-time job as a consultant for a major brokerage firm.

I’d sit in my car during lunch breaks and read on the stationary bike at the gym … squeezing in as much study time as I possibly could to prepare for the rigorous gauntlet of three exams administered by the CMT Association.

Ultimately, all that hard work paid off. I’m honored and proud to be one of only 4,500 CMTs worldwide!

We’re a rare and sometimes misunderstood breed of market analyst. Whereas the typical Wall Street neophyte is ushered into the CFA program, which focuses on analysis of a company’s “fundamentals,” far fewer big-bank analysts have earned the CMT designation, which focuses on what we call “price action.”

CMT Tip: Price Is Paramount

Here’s a riddle for you…

If you buy at $10 and sell at $12, what was it that earned you a $2 profit?

The answer is: The price moved.

And if you buy at $10 and sell at $9, what was it that made you lose a dollar?

The answer is: The price moved.

For no other reason than this, I can make a strong argument that “price is paramount,” simply because real-world, market-traded prices are what determine whether or not you make money.

As intellectually stimulating and emotionally stirring as investing can be, we should remind ourselves that making money is our primary goal.

Simply put, understanding price action is key to making money in the markets.

Simply put, understanding price action is key to making money in the markets.

This Isn’t “Voodoo”

Becoming a CMT didn’t grant me some sixth-sense “superpower.” I can’t see the future, the way a fortune-teller would claim to. In fact, the Code of Ethics I must adhere to as a CMT specifically forbids me from making such a claim.

What’s more, there are some price-action “forecasting” methods I simply can’t put faith in. I guess I’d say they’re a little too “voodoo” for my liking.

See, I’m a scientist at heart. I studied biology and chemistry in college. I learned the scientific method and worked on peer-reviewed research.

I’m a numbers guy. A “quant,” if you will.

So perhaps I can claim to leverage my CMT knowledge a bit differently than most.

To me, it’s not enough to simply “eyeball” the price action of a stock on a chart. I must also know there’s scientifically-rigorous proof that the investment strategy I’m executing is a good one … capable of putting me into high-probability plays, where my potential profits are far greater than potential risks.

For instance, before launching my Cycle 9 Alert option-trading service in 2012, I rigorously tested the trend-and-momentum algorithm I’d created on decades’ worth of historical data. And then I “beta” tested the strategy in live markets.

My own testing, in combination with the trove of academic research I’d read on the momentum strategy, as part of my CMT curriculum, is what ultimately led me to have full confidence in sharing my strategy with thousands of Cycle 9 Alert members — folks I like to think warmly of as my “grandmother,” who is smart and hard-working, but not necessarily trained to understand or trade the markets.

A Teacher at Heart

My mom was a schoolteacher before she retired to raise me and my two brothers. I saw the impact she made on others, and the satisfaction she enjoyed herself, when she “taught a man to fish,” so to speak.

Plenty of the folks who read my work simply want my trade recommendations. That’s OK … and it certainly humbles me to know I’ve earned the faith and confidence of readers like Steve J., who wrote me to say:

If you say ‘buy this,’ I don’t even question it. I immediately go to my account and place the trade.

But I’m big on “teaching,” and sharing all the knowledge I have with readers, for two reasons:

I believe that one has the greatest understanding of how to apply knowledge, only once he can teach that knowledge. So, for me, the process of sharing knowledge is partially a selfish pursuit — it helps to strengthen and solidify my own understanding of it, and how best to apply it in the real world.
I believe “informed investors” are more committed and successful, in the long run, than “blind-faith investors.” Meaning, I believe that if you understand why you’re executing the investment strategies I teach, you’ll make more money with me than if you simply jump when I say “jump.”

What to Expect From “CMT Tips & Tricks”

Each month, I’ll share my “CMT Tips & Tricks” in Money & Markets Daily.

My goal is to share with you the most useful and powerful tools in my CMT toolbox.

These can be simple price-action techniques, such as:

How to measure a stock’s trend.
How to trade a bullish breakout.
Where to place your stop-loss orders.

These can also be more advanced “quant” studies, like:

My “kickstarter” signal, which shows when a “pop” in prices is likely.
My “trouble ahead” signal, used in my 10X Profits service to predict declines.
My “seasonality” signals, which tell us the best times to be invested in each sector.

Ultimately, my goal is to leave you a more knowledgeable and confident investor … which I expect will translate into a more profitable investor.

Frankly, I don’t think you need to earn the CMT designation yourself to become a highly successful investor. If we can get a bit of mine to rub off on you … I think we’ll all do quite well!

As you can see, I have plenty of ideas for topics for my first “CMT Tips & Tricks” article (which will hit your inbox in early October). But if you have a burning question or a topic you’d like me to address, just reach out to my team and me.

Email feedback@moneyandmarkets.com — because we want to implement all of your feedback into Money & Markets Daily!

To good profits,