Binary trading is a form of investment wherein a trader must correctly determine the direction of the price of underlying asset like the share of stock, foreign currency pair, and commodity. Prior to the start of the contract, the binary options trader must state whether the price of his chosen underlying asset will rise o fall in value at the end of the contract”s term. This may sound so easy to do. However, it”s not. A trader who doesn”t understand his underlying asset can lose his investment if he doesn”t take the time to understand how the price will go in the future.