Crypto trading vs staking: which investment strategy is right for you?

The crypto industry has given investors many ways to earn additional, passive and instant income. However, the industry is continuously evolving and new projects are emerging that offer new ways to earn money. Investors, in turn, are also constantly looking for ways to earn and increase their crypto portfolio. Despite innovations, there are two popular approaches for expanding your crypto portfolio.

We are talking about crypto trading and staking, which, although they offer different approaches for receiving rewards, are still aimed at generating income for the investor. Each approach offers its unique features and advantages. Today, we will consider the main differences between crypto trading and staking and determine which approach is more effective and safe. We will also pay special attention to the unique program of the EXMO.com crypto exchange — Earn, and the benefits it provides to investors.

What is crypto trading?

Let’s start with a simple definition. So, crypto trading is any activity of a trader consisting of buying and selling pairs of digital assets to profit from price fluctuations. Crypto trading uses technical analysis, risk management rules and a fundamental understanding of a trader’s crypto assets. Several basic trading strategies have migrated to the crypto industry from classic trading.

Traders can trade within a day (intraday trading), focus on small timeframes and make a large number of transactions to accumulate profits (scalping) or hold positions for several days (swing trading). There are also adherents of the behaviour of large investors, “whales”, who make transactions in accordance with the behaviour of large capital (smart money). In any case, the main goal of crypto trading is to make money on price fluctuations in both downward and upward price directions.

Advantages of crypto trading:

1. You can earn a lot: if you have an effective trading strategy and possess experience and understanding of the market, crypto trading can be profitable. The crypto market is extremely volatile; therefore, traders can count on daily price movements of assets. This allows for finding more potential entry points into a profitable trade.
2. Flexibility: traders can quickly react to sudden events in the market or price fluctuations. Also, limit orders in trading partially automate this process and make traders even more flexible.
3. Variety of trading approaches: crypto trading allows you to use many mechanics and features to open trades successfully. Traders can use chart analysis, candlestick analysis, as well as analyse on-chain data and fundamental background.

Risks of crypto trading:

1. High volatility: the high dynamics of price changes in the crypto market provide both many opportunities and many dangers. A trader can correctly identify a trend and entry point, but the volatility impulse can catch their stop-loss level.
2. Time-consuming: the main resources in crypto trading are time and knowledge. A trader needs to constantly monitor the market and its trends, in order to improve their strategy to remain effective.
3. Higher risks: compared to staking, to be successful in trading, you need to have a much higher risk tolerance. Psychological stability is also necessary because losses are part of trading and only a few people want to put up with it.

What is staking?

Now, let’s move on to a passive and relatively safe way to expand your crypto portfolio. Staking is the process of storing your crypto assets on a crypto exchange. You provide your assets to the exchange for temporary use and to support operational activities, and the platform returns your funds to you with a certain percentage added. Compared to crypto trading, staking is a much safer and easier method for ordinary investors to generate returns and earn in the crypto market.

Advantages of staking:

1. Passive income: Staking allows the investor to earn rewards without actively and continuously managing the investment. The funds are simply held on the exchange’s balance sheet and, in accordance with the platform’s terms and conditions, the investor receives interest for holding the assets.
2. Low risk: Staking provides users with the opportunity to earn passive income without significant risks to the deposit. With staking, you receive a fixed income regulated by the exchange. Your returns depend on the performance of the blockchain, not market volatility or economic events.
3. Blockchain support: In essence, when you receive a return on staking, you are also investing in the stability and efficiency of the platform. And in doing so, you get the most transparent and secure return on investment within the agreed timeframe.

Risks of staking:

1. Lock periods: Some staking programs require owners to lock crypto assets for a certain period of time. Investors are then unable to withdraw or dispose of their assets until the end of the staking period. However, it is important to clarify that some platforms offer flexible staking terms, levelling out this disadvantage.
2. Trading is more profitable: staking is ideal for securing predictable and fairly high returns. However, compared to trading, staking is significantly inferior in potential profitability. In the case of crypto trading, the risks are much higher when compared with a guaranteed and clear return from staking.
3. Network risks: a user’s assets may be at risk if the blockchain where staking takes place is subject to security breaches. However, this disadvantage can be negated by researching the platform and the blockchain where the investor plans to start staking.

What does EXMO’s Earn program offer?

EXMO.com Earn program goes beyond traditional staking and offers a seamless and attractive experience for investors looking to earn competitively high passive income. The Earn program is designed to maximise crypto assets by earning rewards while holding assets in a trader’s crypto wallet.

Why choose EXMO.com Earn?

1. Simple and accessible: with EXMO.com Earn, users do not need to worry about the complexities of staking in a specific blockchain or worry about security. EXMO provides an opportunity to easily start earning passive income through staking with a wide range of supported assets. Users can stake popular cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) and EXMO Coin (EXM).
2. Competitive APY rates: Earn by EXMO.com offers high annual percentage yields that allow you to earn passive income without actively managing your investments. APYs depend on the specific assets that a user stakes. For example, customers can earn up to 5% APY on Bitcoin and 6% APY on Ethereum by staking through the EXMO Earn program. The platform also provides an exceptional 17.5% APY for the native token – EXMO coin – and a competitive 15% APY for USDT and USDC.
3. No lock-up period: Earn by EXMO.com offers unique flexibility for staking. Users can withdraw their assets that are in staking without worrying about the “lock period”. Users earn with the Earn program but at the same time have full control over their assets at any time.
4. Daily rewards: The Earn program offers daily rewards, which makes the staking procedure as transparent as possible. This service provides users with detailed information on their daily earnings on active contracts. Users are able to track profitability and adjust their staking strategy thanks to the flexibility of asset management.
5. High-level security: The crypto exchange uses the most effective security measures to ensure the safety of users’ funds. EXMO.com has implemented 24/7 monitoring by Kroll, which instantly notifies affected individuals of any activity related to their personal information by email. The platform also diversifies assets across protocols to reduce risk and uses innovative custodial solutions, such as Ledger, to ensure comprehensive security of users’ assets.

How to start earning with EXMO.com

Starting to earn by staking with the EXMO.com Earn program is easy:

1. Fund EXMO.com account: deposit funds to buy available cryptocurrencies or transfer them to your EXMO wallet.

2. Choose an asset for staking: Check out the APY offered for a range of assets included in the Earn program and choose the package that suits your goals – Standard or Advanced. Each package offers competitive rates.

• Standard: This package is ideal for beginners and investors who prefer a low-risk way to earn money through staking.
• Advanced: This package suits users wishing to maximise their income with higher returns by locking larger amounts of crypto assets.

3. Earn rewards: traders will receive rewards automatically after the staking period ends. Users can also choose to automatically extend the Earn program to continue earning passively.

Crypto trading vs staking: which is suitable for you?

Crypto trading and staking involve completely different approaches to earning in the crypto market. Everything depends on investment goals, risk tolerance, timeframes and willingness to devote time.

• Crypto trading is an excellent option for investors who spend a lot of time analysing crypto market trends, are ready to spend a considerable time trading and actively manage their capital. Trading is associated with greater risks than staking, but potential rewards are not limited to a certain percentage.
• Staking can be ideal for investors who value security, consistency and capital preservation. EXMO.com’s Earn program offers a good balance for making trading and staking more transparent while offering some of the highest APYs in the market. The Earn program combines the best of classic staking with increased security and high returns while offering full user control over their assets.

Conclusion

Crypto trading and staking are highly effective investment approaches. Each method of earning income can generate great profits due to its unique advantages. EXMO.com understands the importance of both approaches and offers a platform that can satisfy the requirements of traders with different approaches.

The Earn program offers one of the highest returns in the market, which, combined with advanced methods of protecting funds and flexibility in capital management, makes it one of the most attractive options for earning in the crypto industry. EXMO.com also provides various tools for effective and profitable trading in the crypto market for traders wishing to undertake technical analysis and generate high income. Start earning today and take advantage of the best that crypto investments offer on EXMO.com.