This paper deals with the concept of behavioral finance. What does it means, represents and how it affects the market. Because of the increasing number of market anomalies, the question arises whether people are so objective as they have been considered, and can they naturally make the best decisions for themselves , rational decisions. Behavioral Economics, or Behavioral Finance, prove that people, sensual beings, do not always work the best way possible.They are often guided by some other influences that change their attitudes and opinions in a second. The paper describes how and why did the need for combining financial and psychology arisen. Works of well-known economists and psychologists who are dealing with this subjects are also mentioned in this paper. Some of the key terms are explained, and at the end, criticisms of the field of behavioral finance have also been discussed.