What are the benefits of derivative trading over stock market trading? 

There are two distinct kinds of financial markets: derivative trading and stock market trading, each with its own set of advantages.

Leverage:

Leverage, which enables traders to control a large number of assets with a relatively small amount of capital, is one of the main advantages of derivative trading. This could result in greater investment returns.

Risk management:

By hedging their positions, traders can use derivative trading to control risk. This indicates that traders can take a different position in the derivatives market to offset losses in the underlying asset.

Short selling:

Derivative trading also allows traders to short sell, or bet against, an asset. This can be useful for traders who believe that a particular asset's price will decrease in the future.

Cost efficiency:

Due to the low transaction costs, derivative trading is regarded as a more cost-effective method of trading than stock market trading.

Flexibility:

Traders have more options when it comes to the strategies they can use to profit from market movements thanks to the wide range of products offered by derivative trading, such as options and futures.

It is important to note that the aforementioned advantages are unique to derivative trading, but there are also advantages to stock market trading, including the ability to own the underlying assets, earn dividends, and hold the assets for long-term appreciation.