Binary option
An instrument where you predict whether an asset price will be above or below a level at a set time, with a fixed return (payout) if you are right.
The binary option is an "all or nothing" financial instrument. You make a simple prediction — will an asset price be above or below a certain level when the time runs out? — and the outcome has only two possible results.
It works with four elements. The asset, which can be a crypto pair like BTC/USD. The stake, how much you decide to risk. The expiration time, the exact moment the trade is settled (from seconds to hours). And the payout, the fixed percentage return if the prediction is right.
If you get the direction right, you receive the amount invested plus the payout. If you get it wrong, you lose the amount you put into the trade. It is this binary symmetry that gives the instrument its name: there is no middle ground and no partial result.
The simplicity is appealing, but the risk is real: each trade can result in a total loss of the amount staked, and the outcome depends on predicting the market over the very short term. That is why it is advised to start on a demo account, study technical analysis and apply strict bankroll management before trading with real money.