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Feb 17, 2023

Advantages of Derivative Trading

  • Low transaction costs
  • Used in risk management
  • Market efficiency
  • Determines the price of an underlying asset
  • Risk is transferable

Disadvantages of Derivative Trading

After knowing what is derivative trading, it’s imperative to be familiarised with its disadvantages as well.
  • Involves high risk
  • Counterparty risk
  • Speculative in nature
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