NQ Rule Matrix

# NQ Rule Matrix – Indicator User Guide

## Purpose (Read This First)

This indicator is **not** a signal generator and it is **not** predictive.

Its only job is to **classify the market environment in real time** so you stop forcing trades in conditions where NQ statistically punishes discretion.

If you use this to justify trades you already want to take, you will lose money faster — not slower.

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## What the Indicator Does

The indicator continuously evaluates **intermarket + internal conditions** and assigns the market to a **Rule Matrix State**.

It answers one question only:

> *Is NQ in a condition where continuation is favored, rotation is occurring, or risk should be reduced/avoided?*

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## The Core Inputs (Non‑Negotiable)

The matrix is built on **confirmation, not price alone**.

It monitors:

* **NQ price behavior** (structure, acceptance, rejection)
* **QQQ trend state** (above / below key levels)
* **US 10Y yields (US10Y)** direction
* **DXY (US Dollar Index)** behavior
* **SMH (Semiconductors)** as tech leadership proxy

If you ignore any of these, you are breaking the system.

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## Matrix States & How to Use Them

### 🟢 GREEN — Trend Continuation Environment

**Definition:**

* QQQ: Above key levels
* US10Y: Falling or stable
* DXY: Weak or neutral
* SMH: Leading / confirming
* NQ: Holding structure

**What This Means:**

* Institutions are aligned
* Continuation is statistically favored

**Rules:**

* Normal size only
* Trade with structure
* No countertrend trades

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### 🟡 YELLOW — Transition / Rotation Risk

**Definition:**

* Mixed confirmations
* One or more intermarket inputs diverging
* Price still holding, but **conditions degrading**

**What This Means:**

* Rotation may be starting
* Follow‑through probability drops

**Rules:**

* Reduce size or stand down
* No aggressive continuation trades
* Expect chop, failed breakouts, fake strength

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### 🔴 RED — Risk‑Off / Breakdown Environment

**Definition:**

* QQQ: Below key levels
* US10Y: Rising
* DXY: Strengthening
* SMH: Weak / breaking
* NQ: Losing structure

**What This Means:**

* Liquidity is leaving tech
* Downside volatility expands

**Rules:**

* No long bias
* Only defensive participation if at all
* Survival > opportunity

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### ⚠️ FAKE STRENGTH — Trap Condition

**Definition:**

* NQ pushing up
* Intermarket confirmation missing or opposite
* Volume weak or late

**What This Means:**

* Retail‑driven moves
* High failure rate

**Rules:**

* Do not chase
* Treat strength as suspect

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### 🚨 EMERGENCY — Capital Protection Mode

**Definition:**

* Sharp intermarket deterioration
* Volatility expansion
* Multiple inputs flip simultaneously

**What This Means:**

* Market is repricing risk

**Rules:**

* Flat is a position
* Preservation mode only

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## How to Use the Indicator (Step‑by‑Step)

1. **Check the Matrix State first** — before price
2. Accept the classification **without debate**
3. Only execute strategies allowed in that state
4. If the state changes, **your behavior changes immediately**

No exceptions.

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## What This Indicator Is NOT

* ❌ A buy/sell system
* ❌ A timing tool
* ❌ A replacement for execution skill

It is a **filter**. Filters make money by keeping you out of bad trades.

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## The Only Metric That Matters

Not win rate.
Not P&L.

**Obedience to the matrix.**

If you follow it perfectly and still lose, the system can be improved.
If you don’t follow it, nothing can help you.

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## Final Warning

If you find yourself:

* Looking for exceptions
* Asking “what if”
* Adding extra indicators

You are reverting to emotional trading.

The matrix exists to stop that.