Chapter I

Behavioral Finance is an economic and scientific study on human behavior. It is a research done on social cognitive and emotional biases to understand economic decision and how they affect markets. The behavioral finance is mainly concerned with the human rationality and its practical aspects. This theory is a study of Human psychology and Economics. Behavioral finance is the upcoming study of how Human emotions and cognitive errors can cause disasters in ones financial affairs. In stock markets, behavioral finance can help to study situations in which we often hold on to stocks that crashes, sell stocks that show an uptrend, sometimes we overvalue stocks or jump in late and buy stocks that have peaked in a rally just before the price declines, we, the humans take desperate risks and gamble wildly when our stocks descend, we avoid taking the reasonable risk of buying promising stocks unless there is an absolutely 'assured' profit and never find our right price to buy and sell stocks.