The growing popularity of Nasdaq’s 24/7 contracts has created the impression of continuous price discovery, but this is misleading. According to market expert Marcus Momm, when the US stock market is closed, these contracts do not reflect fundamental financial realities; instead, they serve as a leverage-based stress test dominated by liquidation processes. The Nasdaq 24/7 contract is not a true index but an artificial trading mechanism whose price movements are largely influenced by leverage, margin positioning, funding rates, stop-loss clustering, and forced liquidations.
Traditional price discovery mechanisms such as ETF arbitrage, options market feedback, or actual cash-to-equity transactions are inactive during these times. This means that when the market is closed, prices respond not to new financial or political information but rather to estimates of how the market will open. This structure results in sudden price swings of 3 to 4 percent during weekly holidays, which normalize once the market opens.
Marcus Momm highlights a dangerous trend where low volatility encourages traders to take on higher leverage, leading to dense clusters of stop losses. Minor fluctuations trigger liquidations that exaggerate price volatility far beyond actual market conditions. Since there is no fundamental price anchor when the market is closed, volatility is controlled only by margin and risk limits, not by underlying financial facts.
For traders, this situation creates uncertainty where trading Nasdaq 24/7 contracts resembles a coin toss rather than an informed prediction. While a return to the actual market is inevitable, the path there is highly unstable and unpredictable. Therefore, investing in these contracts is mostly a game of avoiding liquidation rather than accurately gauging market direction.
Source: binance
