The Arizona Rules - Rob Booker

Guiding Principles
We developed this system so that we could increase the number of profitable divergence
and NY Box trades that we take, and decrease the number of losing trades for each
system. We found:
1. Trending markets are great for breakout / NY Box trading.
2. Ranging markets are great for divergence (reversal) trending.
Robert Miner, whose specific credentials are not important right now (look him up for all
kinds of interesting and complex trading stuff), once wrote:
Because Elliott’s Wave Principle and its application is not 100% objective like
time and price projections, it has been derided by many as useless and little more
than guess-work. This is particularly the tack taken by system junkies and
systems promoters who live under the illusion that market activity and a
successful business of trading or investing may be reduced to a mathematical
algorithm that will provide them with keys to profits with no strain on the brain. 1
I make no claim to have invented a system or methodology to compete with or compare
to the Elliott Wave Principle. Instead, I am going to introduce you to a perspective that I
have found to be personally helpful in my own trading, and equally or more beneficial to
those whom I have taught it. That said, I would like you to consider Miner’s excellent
observation as you read through and begin to apply the Arizona Rules.
This means that you will gain much more from these rules if you allow yourself to use
them as flexible rules, rather than a strict set of inviolable orders. I could say this 1,000
times in a row and I would still have not said it enough. Remember: the Arizona Rules
are guidelines to help you make sense of a chaotic market. There are no magic systems,
no perfect set of mathematical formulas.
Using the Arizona Rules is very much like comparing your left hand to your friends’ left
hands – each hand will be slightly different, but they will be shaped similarly. When you
were a child, learning to recognize a human hand at a glance did not require you to
memorize a set of rules about exact lengths of fingers – instead, you simply needed to
remember a basic shape. And then you could make your own distinctions.
When applying the Arizona Rules to the currency markets, you are going to compare one
“hand” – the one I describe here – to the current situation in the market. There will be
differences, but you should be able to, at a glance, discern common features and make
much better and profitable trading decisions for yourself over time.
1 Robert Miner, “Elliott Wave Trading in the Real World,” copyright 1997 by Robert Miner.
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