2021 Curriculum 2022 Curriculum

Level III. The Integration of Technical Level III. The Integration of Technical
New for 2022
Analysis Analysis
Section I: Risk Management Removed for 2022 Section I: Risk Management

1. System Design and Testing 1. System Design and Testing

Assess the value and challenges of using a system for trading Assess the value and challenges of using a system for trading
or investing or investing

Compare and analyze differences between discretionary and Compare and analyze differences between discretionary and
nondiscretionary systems nondiscretionary systems

Evaluate the mind-set and discipline required to develop and trade Evaluate the mind-set and discipline required to develop and trade
with a system with a system

Organize the basic procedures for designing a system Organize the basic procedures for designing a system

Inventory types of technical trading systems Inventory types of technical trading systems

Defend the necessity of risk management protocols in a trading system Defend the necessity of risk management protocols in a trading system

Examine critical aspects of performing system tests Examine critical aspects of performing system tests

Compare and evaluate standard measures of system profitability Compare and evaluate standard measures of system profitability
and risk and risk

Differentiate between various methods of optimization Differentiate between various methods of optimization

2. Money and Portfolio Risk Management 2. Money and Portfolio Risk Management

Distinguish between trading strategies and money-management Distinguish between trading strategies and money-management
strategies strategies

Evaluate the significance of the theory of runs and a martingale Evaluate the significance of the theory of runs and a martingale
strategy strategy

Model position size using risk of ruin and optimal f methods Model position size using risk of ruin and optimal f methods

Differentiate between diversifiable and correlated risk Differentiate between diversifiable and correlated risk

Compare and analyze the various types of stops used to manage risk Compare and analyze the various types of stops used to manage risk

Assess the minimum capital needed for trading a system Assess the minimum capital needed for trading a system
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Section I: Risk Management Section I: Risk Management

3. System Evaluation and Testing 3. System Evaluation and Testing

Choose factors for system testing including objectives, parameters Choose factors for system testing including objectives, parameters
and test data and test data

Assess the use of in-sample and out-of-sample data Assess the use of in-sample and out-of-sample data

Evaluate optimized test results for continuity and significance using Evaluate optimized test results for continuity and significance using
a variety of visualization methods a variety of visualization methods

Explain the basics of using genetic algorithms Explain the basics of using genetic algorithms

Illustrate the concept of robustness in a trading system Illustrate the concept of robustness in a trading system

Critique the use of performance and risk metrics based Critique the use of performance and risk metrics based
on a given objective on a given objective

4. Practical Considerations 4. Practical Considerations

Plan for system development and testing: data, techniques, Plan for system development and testing: data, techniques,
and initial evaluation of results and initial evaluation of results

Assess the potential impact of price shocks and formulate plans Assess the potential impact of price shocks and formulate plans
for managing them for managing them

Assess the impact of runs and martingales on a trading system Assess the impact of runs and martingales on a trading system

Evaluate the trade-offs between trend-following and mean-reverting Evaluate the trade-offs between trend-following and mean-reverting
systems systems
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Section I: Risk Management Section I: Risk Management

5. Risk Control 5. Risk Control

Compare risk and performance metrics derived from the following: Compare risk and performance metrics derived from the following:
Sharpe Ratio, Information Ratio, Treynor Ratio, Calmar Ratio, Sharpe Ratio, Information Ratio, Treynor Ratio, Calmar Ratio,
Sortino Ratio Sortino Ratio

Interpret calculations of Value at Risk (VaR) Interpret calculations of Value at Risk (VaR)

Compare various methods for setting stops and profit targets Compare various methods for setting stops and profit targets

Model position size using various capital and volatility approaches Model position size using various capital and volatility approaches
in this chapter in this chapter

Compare approaches to compounding positions Compare approaches to compounding positions

Calculate the risk of ruin Calculate the risk of ruin

Calculate optimal f Calculate optimal f

6. Statistical Analysis 6. Statistical Analysis

Assess random and nonrandom trends in trading system Assess random and nonrandom trends in trading system
performance performance

Examine sampling and sample statistics in trading Examine sampling and sample statistics in trading

Calculate relative frequency Calculate relative frequency

Organize six elements of a statistical inference problem Organize six elements of a statistical inference problem

Differentiate between theoretical and empirical probabilities Differentiate between theoretical and empirical probabilities

Derive a sampling distribution Derive a sampling distribution

7. Hypothesis Tests and Confidence Intervals 7. Hypothesis Tests and Confidence Intervals
Differentiate between necessary and sufficient conditions Differentiate between necessary and sufficient conditions

Compare the assertions of the null and alternative hypotheses Compare the assertions of the null and alternative hypotheses

Defend why the null hypothesis should be framed as the target of a test Defend why the null hypothesis should be framed as the target of a test
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Section II: Asset Relationships Section II: Asset Relationships

8. Regression 8. Regression

Assess values generated by regression, multiple regression Assess values generated by regression, multiple regression
and tolerance calculations and tolerance calculations

Select meaningful predictor variables for multiple regression studies Select meaningful predictor variables for multiple regression studies

9. International Indices and Commodities 9. International Indices and Commodities

Assess values generated by regression, multiple regression and Assess values generated by regression, multiple regression and
tolerance calculations tolerance calculations

Select meaningful predictor variables for multiple regression studies Select meaningful predictor variables for multiple regression studies

10. The S&P 500 10. The S&P 500

Compare general correlations among the S&P 500, international Compare general correlations among the S&P 500, international
indexes and other markets discussed indexes and other markets discussed

11. European Indices 11. European Indices

Compare general correlations among international indexes, stocks Compare general correlations among international indexes, stocks
and other markets discussed and other markets discussed
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Section II: Asset Relationships Section II: Asset Relationships

12. Gold *Lesson # Change* 9. Gold

Compare general correlations among gold, dollar, stocks and indexes Compare general correlations among gold, dollar, stocks and indexes

13. Intraday Correlations 13. Intraday Correlations

Evaluate correlation characteristics in various timeframes among Evaluate correlation characteristics in various timeframes among
the index futures discussed the index futures discussed

14. Intermarket Indicators *Lesson # Change* 10. Intermarket Indicators

Construct relative strength studies and evaluate the results Construct relative strength studies and evaluate the results

Compare intermarket indicators described in this chapter Compare intermarket indicators described in this chapter

Prepare recommendations based on asset correlation data Prepare recommendations based on asset correlation data

15. A Unique Way to Visualize Relative Strength *Lesson # Change* 11. A Unique Way to Visualize Relative Strength

Evaluate the trend and momentum of relative strength using Relative Evaluate the trend and momentum of relative strength using Relative
Rotation Graphs (RRG) Rotation Graphs (RRG)

Assess relative strength using the indicators derived from the RRG Assess relative strength using the indicators derived from the RRG
concept concept
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Section III: Portfolio Management Section III: Portfolio Management

16. Fact, Fiction, and Momentum Investing *Lesson # Change* 12. Fact, Fiction, and Momentum Investing

Defend the use of momentum strategies using historical data Defend the use of momentum strategies using historical data

Argue against common myths about momentum strategies Argue against common myths about momentum strategies

17. Analyzing the Macro-Finance Environment *Lesson # Change* 13. Analyzing the Macro-Finance Environment

Assess the business cycle, the financial cycle and their relationship Assess the business cycle, the financial cycle and their relationship

Manage a sector rotation model based on the business and Manage a sector rotation model based on the business and financial
financial cycles cycles

Use leading, coincident and lagging indicators of economic activity Use leading, coincident and lagging indicators of economic activity

18. Portfolio Risk and Performance Attribution *Lesson # Change* 14. Portfolio Risk and Performance Attribution

Assess the statement “total risk = volatility = standard deviation Assess the statement “total risk = volatility = standard deviation
of returns” of returns”

Compare the three formulations of total risk Compare the three formulations of total risk

Defend the assertion that “diversification reduces only Defend the assertion that “diversification reduces only
firm-specific risk” firm-specific risk”

Defend beta and its role in assessing portfolio risk Defend beta and its role in assessing portfolio risk

Employ the Sharpe and Treynor ratios for individual stocks Employ the Sharpe and Treynor ratios for individual stocks
and portfolios and portfolios
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Section IV: Behavioral Finance Section IV: Behavioral Finance

19. Behavioral Biases *Lesson # Change* 15. Behavioral Biases

Distinguish between two types of biases: cognitive and emotional Distinguish between two types of biases: cognitive and emotional

Formulate plans to counter behavioral biases in making investment Formulate plans to counter behavioral biases in making investment
decisions decisions

Propose methods to capitalize on the behavioral biases of other

Propose methods to capitalize on the behavioral biases of other
market participants
market participants
Examine the specific behavioral biases in each of those categories
Examine the specific behavioral biases in each of those categories

20. Investor Psychology *Lesson # Change* 16. Investor Psychology

Inventory general behavioral aspects that impact price action Inventory general behavioral aspects that impact price action

Evaluate behavioral elements that contribute to the development Evaluate behavioral elements that contribute to the development
of chart patterns of chart patterns

Evaluate behavioral elements that contribute to the persistence Evaluate behavioral elements that contribute to the persistence
of trends of trends

Evaluate behavioral elements that contribute to periods of Evaluate behavioral elements that contribute to periods of
consolidation consolidation

Evaluate behavioral elements that contribute to trend reversals Evaluate behavioral elements that contribute to trend reversals

21. Are Two Heads Better than One? *Lesson # Change* 17. Are Two Heads Better than One?

Assess the negative consequences of group/committee Assess the negative consequences of group/committee
decision making decision making

Organize approaches to mitigating the effects of group biases Organize approaches to mitigating the effects of group biases
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Section IV: Behavioral Finance Section IV: Behavioral Finance

22. The Anatomy of a Bubble *Lesson # Change* 18. The Anatomy of a Bubble

Diagram the five stages of a bubble Diagram the five stages of a bubble

Assess the characteristics of each of the five stages Assess the characteristics of each of the five stages

Assess hypothetical market environments to identify what stage Assess hypothetical market environments to identify what stage
they indicate they indicate

23. De-Bubbling: Alpha Generation *Lesson # Change* 19. De-Bubbling: Alpha Generation

Assess the three cross-section strategies that should benefit Assess the three cross-section strategies that should benefit
from a de-bubbling/deflationary period from a de-bubbling/deflationary period

24. Behavioral Techniques *Lesson # Change* 20. Behavioral Techniques

Evaluate market reactions to events: planned news releases versus Evaluate market reactions to events: planned news releases versus
price shocks price shocks

Estimate reactions to events using the volatility ratio Estimate reactions to events using the volatility ratio

Assemble a COT Index and a COT Sentiment Index from Assemble a COT Index and a COT Sentiment Index from
Commitments of Traders (COT) data Commitments of Traders (COT) data
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Section V: Volatility Analysis Section V: Volatility Analysis

25. The VIX as a Stock Market Indicator *Lesson # Change* 21. The VIX as a Stock Market Indicator

Compare movement in the VIX and the S&P 500 Compare movement in the VIX and the S&P 500

Evaluate VIX and VIX futures price relationships for signals Evaluate VIX and VIX futures price relationships for signals

Formulate market forecasts that include volatility as an input Formulate market forecasts that include volatility as an input

26. Hedging with VIX Derivatives *Lesson # Change* 22. Hedging with VIX Derivatives

Defend the rationale behind hedging with VIX products Defend the rationale behind hedging with VIX products

Propose hedge strategies using VIX options and futures Propose hedge strategies using VIX options and futures

27. Advanced Techniques *Lesson # Change* 23. Advanced Techniques

Assess market reactions to events: planned news releases versus Assess market reactions to events: planned news releases versus
price shocks price shocks

Compare several measures of volatility Compare several measures of volatility

Calculate profit targets and stop-loss levels using volatility Calculate profit targets and stop-loss levels using volatility

Evaluate methods for filtering a system’s signals based on volatility Evaluate methods for filtering a system’s signals based on volatility

Assess how fractal, chaos and entropy concepts may be applied Assess how fractal, chaos and entropy concepts may be applied to
to trading trading

Explain the basics of using neural networks Explain the basics of using neural networks

Explain the basics of using genetic algorithms Explain the basics of using genetic algorithms
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Section VI: Classical Methods Section VI: Classical Methods

28. Pattern Recognition *Lesson # Change* 24. Pattern Recognition

Compare and evaluate pivot points and DeMark’s calculations Compare and evaluate pivot points and DeMark’s calculations
for price ranges for price ranges

Examine intraday data for idiosyncratic patterns in varios markets Examine intraday data for idiosyncratic patterns in varios markets

Assess the use of opening gaps as trading signals Assess the use of opening gaps as trading signals

29. Multiple Time Frames *Lesson # Change* 25. Multiple Time Frames

Evaluate chart data using Elder’s, Krausz’s and Pring’s multiple Evaluate chart data using Elder’s, Krausz’s and Pring’s multiple
time-frame methods time-frame methods

Defend Krausz’s six rules for multiple time frames Defend Krausz’s six rules for multiple time frames

30. Candlestick Analysis *Lesson # Change* 26. Candlestick Analysis

Evaluate the strengths and weaknesses of candlestick charts Evaluate the strengths and weaknesses of candlestick charts

Categorize reversal and continuation candlestick patterns Categorize reversal and continuation candlestick patterns

Interpret the nine important price action guidelines Interpret the nine important price action guidelines

Assess the significance of various Japanese candlestick patterns Assess the significance of various Japanese candlestick patterns
to pinpoint reversals and breakouts to pinpoint reversals and breakouts

Integrate candlestick charts with other technical studies Integrate candlestick charts with other technical studies
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Section VI: Classical Methods Section VI: Classical Methods

31. Progressive Charting *Lesson # Change* 27. Progressive Charting

Evaluate candle patterns as they develop in a chart Evaluate candle patterns as they develop in a chart

Compose responses to the four questions posed at the outset Compose responses to the four questions posed at the outset
of the chapter of the chapter

32. Bringing It All Together: Real-World Charts *Lesson # Change* 28. Bringing It All Together: Real-World Charts

Predict likely price action based on candlestick patterns Predict likely price action based on candlestick patterns
and the overall context of the price action and the overall context of the price action

Propose entry and exit points based on patterns, price action Propose entry and exit points based on patterns, price action
and risk and risk

Assess trend persistence based on candlestick patterns Assess trend persistence based on candlestick patterns
and the overall context of the price action and the overall context of the price action

33. Conclusions *Lesson # Change* 29. Conclusions

Assess the validity of the 12 major conclusions about technical Assess the validity of the 12 major conclusions about technical
indicators the authors present indicators the authors present

Defend the use of technical indicators when properly employed Defend the use of technical indicators when properly employed
in a variety of market environments in a variety of market environments

Employ the results of the ARIMA forecast to generate trading Employ the results of the ARIMA forecast to generate trading
signals signals

Demonstrate use of linear regression to generate trading signals Demonstrate use of linear regression to generate trading signals

Illustrate the use of linear regression for relative strength studies Illustrate the use of linear regression for relative strength studies