AxCrypt is one of the best open source file encryption software for Windows. It integrates seamlessly with Windows to encrypt, decrypt, store, send and work with individual files.
While selecting a file for encrypting, you can use both passwords, as well as sample key-file. In case you are encrypting multiple files or you are a one-password type of guy, check the box and setup the default password for further encryption.
There are different algorithms for encryption purposes, but as always AES is preferred. By default, before encryption files get compressed.
AxCrypt also gives the opportunity of secure file deletion.
If you are sending encrypted files to your peers, there is no need them to install the whole package. AxDecrypt is a small application that is used solely for decrypting files created with AxCrypt.