Binary Options are a relatively new financial product. It is a type of option that can only have two possible outcomes. You either win or lose, this is the BINARY part of the name. On or off, one or zero, win or lose, positive or negative, there is only two possible states for the option to expire in. Similar to the more well known, common options, you have a PUT option and a CALL option.
Essentially if you think the underlying asset is going to be higher at expiry than it is now, you buy a CALL option. If the asset is indeed higher at expiry than it was when you purchased it, you receive the payout on the option, which is equal to the premium paid, minus the costs. If it is lower, you receive nothing and lose the premium you paid to enter the binary option trade.
And the opposite is true of PUT options. If you believe the asset is going to be lower at expiry than it is now, you buy a PUT option. If you are correct, at the expiry of the option you will receive a payout equal to the premium minus the costs.
For a more in depth explanation it is advised to view this explanation of Binary Options, on Wikipedia.
A popular, modern way to trade binary options is via the use of an automated binary options trading bot. Be sure you thoroughly check any automated trading solutions before you implement them on your live trading account. They are famous for ‘blowing up’ accounts in record time. As always when trading, do not risk more money than you are willing to lose. And test any systems rigorously on a demo account before going live. There are also many binary option trading system review sites like www.legalinsiderbotreview.net that can give you further insight into the effectiveness of any advertised bots. Legal Insider Bot is an automated trading service provided by Greg Marks, an ex hedge fund trader. In an industry full of thieves and charlatans, his no nonsense approach to trading and signal providing is a refreshing change.