CMT, CFA, CAIA: Which Initials Do I Need?

• Posted by Greg Harmon
• on May 6th, 2014

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I had a couple of twitter followers ask  today about the difference between these designations so I though I would give you my quick 2 cents worth. Each destination has its own merits and each focuses on a very different part of the market.

 

 

 

 

 

Chartered Market Technician, CMT: This designation is given by the Market Technicians Association. It requires passing 3 tests and has a work experience requirement before you can be sponsored for the designation by current CMT holders. The scope of material is entirely about technical analysis and covers many areas including Classical Technical Analysis, Japanese Candle sticks, Point and Figures Elliott Wave and Sentiment among others. The curriculum and reading material is essential to traders, and from my perspective the designation of CMT to a trader in any large firm or one looking to gather assets to manage. Think of this as a trader designation.

Chartered Financial Analyst, CFA: This designation granted by the CFA Institute also requires passing 3 tests and has a work experience requirement. The scope of material changes for each test and is heavily quantitative for the first test and by the third one focused on asset allocation and appropriateness of a portfolio. This designation is a near requirement to work as a PM or Analyst at a Mutual Fund, Hedge Fund or any other place that manages money either in an institutional way or for institutions. Think of this as the Analyst or PM designation.

Chartered Alternative Investment Analyst, CAIA: this designation is the newest and is granted by the CAIA Association. It has two tests to pass and a 1 year work experience requirement. The scope of material is a broad coverage of alternative investments (read not equities or bonds) including Risk Management, Real Estate, Hedge Funds, Commodities, Private Equity and Structured Products. From my perspective it is almost exclusively for those that want to be in the Hedge Fund, Private Equity and Fund of Funds space, but not as a portfolio manager or analyst of the underlying assets. Think of this as the Fund of Funds or Fund Manager designation.

These quick synopses are far from comprehensive, but give you an initial segmentation. You can dig further below:

CMT

CFA

CAIA

I am a current CMT and CFA charterholder, and have held the CAIA charter in the past.

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades from Amazon.

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