NQ Rule Matrix

# NQ Rule Matrix Indicator – TradingView User Guide

## Purpose of This Indicator

This indicator exists to **control behavior**, not to entertain you with signals.

It tells you **what type of market you are in** so you stop trading bad environments. If you ignore it, you are choosing randomness.

The indicator does **not**:

* Predict tops or bottoms
* Give buy/sell signals
* Replace your entry model

It **does**:

* Classify market conditions in real time
* Prevent overtrading
* Enforce discipline before entries

If you use this indicator *after* entering a trade, you are already wrong.

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## What the Indicator Is Measuring (Plain + Technical)

### Simple explanation

The indicator watches how **NQ behaves** and how **ES reacts**.

But markets don’t move alone.

NQ is heavily influenced by:

* **SMH** (chip stocks)
* **QQQ** (big tech basket)
* **US10Y** (interest rates)

If these are working together, moves are cleaner.
If they fight each other, trading gets dangerous.

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### Technical explanation

The indicator evaluates:

* NQ price structure and momentum
* ES confirmation or divergence
* **Intermarket correlation between SMH, QQQ, and US10Y**
* Strength vs follow-through
* Market stability vs disorder

Strong trends require **alignment across risk assets and rates**. When correlations break, probability collapses.

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## Why SMH, QQQ, US10Y, and the Day Matter

This is the part most traders ignore — and it’s why they trade chop and call it bad luck.

### Simple explanation

Think of the market like a team:

* **QQQ** is the whole team
* **SMH** is the strongest player (chips)
* **US10Y** is the referee (interest rates)
* The **day** tells you how tired or excited the team is

If the best player and the team are moving the same way *and* the referee isn’t stopping the game, things flow.

If they disagree, the game gets messy.

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### Technical explanation

#### QQQ (Nasdaq Environment)

* QQQ defines the **broader tech regime**
* If QQQ is trending cleanly, NQ continuation has support
* If QQQ is chopping, NQ moves are less reliable

#### SMH (Semiconductor Leadership)

* Semiconductors are the **engine** of Nasdaq
* Strong SMH = real institutional participation
* Weak or diverging SMH = fragile NQ moves

If NQ is pushing but SMH is lagging, strength is suspect.

#### US10Y (Rates & Risk Control)

* Rising yields = pressure on growth stocks
* Falling or stable yields = relief for tech
* Sharp rate moves create volatility and failed follow-through

NQ trends best when US10Y is **not fighting the move**.

#### The Day (Context Matters)

Not all days behave the same.

* Trend days need correlation
* Choppy days expose divergence faster
* News days exaggerate correlation breaks

Ignoring the day type leads to overconfidence in the wrong environment.

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### How This Fits the Matrix

* 🟢 Green Matrix:

* QQQ, SMH aligned
* US10Y stable or supportive
* NQ + ES agreement

* 🟡 Yellow Matrix:

* Partial alignment
* SMH lagging or rates drifting
* Reduced follow-through

* 🔴 Red Matrix:

* Correlation breakdown
* SMH and QQQ diverge
* US10Y moving aggressively

If correlations break, the matrix degrades — even if price is moving.

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## Matrix States & How to Use Them

### 🟢 GREEN MATRIX — Trade Allowed

**What it means:**

* NQ and ES are directionally aligned
* Clean structure
* Momentum supports continuation

**What you do:**

* Trade your full strategy
* Normal position size
* Favor continuation setups

**What you do NOT do:**

* Overthink
* Countertrend trade

**Rule:** If the matrix is green, your strategy is allowed to work.

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### 🟡 YELLOW MATRIX — Caution Zone

**What it means:**

* Partial divergence
* Slowing momentum
* Compression or overlap

**What you do:**

* Reduce size
* Be selective
* Wait for clarity

**What you do NOT do:**

* Force trades
* Increase size

**Rule:** Yellow is a warning, not an invitation.

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### 🔴 RED MATRIX — No Trade Zone

**What it means:**

* Clear divergence between NQ and ES
* Chop
* Failed moves

**What you do:**

* Stay flat
* Protect capital

**What you do NOT do:**

* “Try one trade”
* Scalping out of boredom

**Rule:** Red matrix days are capital preservation days.

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## How to Use the Indicator Step-by-Step

1. Load the indicator on **NQ**
2. Confirm ES is enabled (required)
3. Check matrix state **before market open**
4. Re-check after major session transitions
5. Only trade if matrix allows

If your entry triggers but the matrix disagrees — **you skip the trade**.

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## Do’s and Don’ts

### DO:

* Let the matrix decide *if* you trade
* Combine with a single entry model
* Respect no-trade environments

### DON’T:

* Stack indicators to override the matrix
* Trade because you are bored
* Blame the indicator for ignored rules

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## Common Misuse (Read This Carefully)

* Using the indicator to justify bad trades
* Ignoring ES confirmation
* Trading red matrix days and calling it “practice”

That’s not learning. That’s gambling.

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## Final Rule (Non-Negotiable)

> The matrix decides the environment.
> Your strategy decides the execution.
> If you reverse those roles, you will lose.

This indicator is a **gatekeeper**.
If the gate is closed, you wait.