If you are pursuing a career in day trading or as an analyst, having a certification can help establish you as a credible thought leader in the space.
In this article, I will discuss the four certifications that can help your professional trading career.
Having a certification is no guarantee of success in the markets. You will still need to put in the hard work; however, it does demonstrate to clients you have a base level understanding of trading.
1. The Commodity Trading Advisor (CTA)
Also known as CTA for short, the commodity trading advisor is a qualified professional that can provide trading and other services for clients in the futures and options markets.
CTAs are regulated by the U.S. Commodity Futures Trading Commission (CFTC) and requires membership in the National Futures Association.
Part of the requirement for becoming a CTA is you must pass the Series 3 exam in order to gain membership to the NFA. In addition, you need your Series 3 a full two years before seeking membership into the NFA.
Series 3 Exam
The cost of the exam is $125 and you need a 70% passing score on the test.
The bulk of the series 3 focuses on the technical aspects of trading, market terminology, regulations and agricultural policies.
2. Certified Financial Technician (CFTe)
As the name suggests, this certification program has to deal with technical analysis and general trading concepts.
The course is accredited by the International Federation of Technical Analysts (IFA). The IFTA is a not-for-profit organization and has branches in over 24 countries.
There are two levels of the certification program.
Level I and Level II
The first course covers the early days of the Dow, to Wyckoff, to market efficiency and random walk theories. You then study trends, percentage retracements, and regression lines.
Traders are also tested on other chart concepts such as Point and Figure.
Candidates go deeper into technical analysis and focus on topics such as Elliott wave theory and Gann.
The CFTe certification course is a self-learning program where you only pay for the fees to take the test. Most of the syllabus requirements and reading materials are available for free. The cost of the exam is $850 for level I and $1,150 for level II.
3. Certified Market Technician (CMT)
The Certified market technician is another popular certification course accredited by the Market Technician Association (MTA). The CMT course has three levels.
All three levels must be cleared within 5 years from taking the Level I exam.
The CMT has a wide following, especially in the U.S. and has branches all over the world. To take the CMT exam, the candidate must also have three years of relevant work experience.
Besides the above, readers in the UK should be familiar with the Society of Technical Analysts. This is a UK based group of technical analysts and offers diploma courses. It is considered to be on par with the CFTe.
However, unlike other certification courses, the STA’s diploma courses require physical participation and the course takes place every year from October to December at the London School of Economics and comes at a cost of 995 GBP
Who Is a Candidate for these Certifications?
It is not just day traders who opt for trading certifications. Investment bankers and financial analysts also use these courses to sharpen their technical skills.
This allows employees of firms to speak with clients that value fundamental analysis or technical analysis.
Certifications trigger one of two emotions.
First, there are those that value the certification and it increases the trust between the practitioner and potential customers.
Then there are those that feel a certification means little to nothing. If the person has no real-life experience or past performance, the certification is just a piece of paper.
So at the end of the day, should you go with the school of hard knocks or pay the entry fee for one of these certifications?
The truth lies somewhere in the middle and ultimately comes down to your goals.
If you are hoping to provide professional services a certification will help you build credibility and trust.
However, if you are looking to just trade your own funds, the course materials may prove helpful. However, you may be better off finding a course that specifically covers trading strategies.
Al Hill is one of the co-founders of Tradingsim. He has over 18 years of day trading experience in both the U.S. and Nikkei markets. On a daily basis Al applies his deep skills in systems integration and design strategy to develop features to help retail traders become profitable. When Al is not working on Tradingsim, he can be found spending time with family and friends.
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