ABSTRACT
This research thesis work begins by introducing ‘behavioral finance’ and how its theories are in stark disparity with that of conventional financial theories that have been experienced for decades. Since its inception in 1970s behavioral finance has tried to explain and justify the existence of a number of market anomalies by incorporating behavioral characteristics of financial decision making that may not for all time appear significant to the trader/ dealer. It highlights one aspect of behavioral finance that can be seen in the financial market as called: Gambler’s Fallacy, due to the very nature of the behavioral aspect it refers to. The study not only primarily focuses upon the stock and shares’ market price but also throws light on the way how trading of these devices/ gadgets/ instruments is affected by gambler’s fallacy. Therefore sample population for this thesis has been selected from Lahore Stock Exchange, Pakistan. The method of research has been purely through questionnaire and the sample was taken from the Lahore Stock Exchange from people with no specialized financial knowledge. This thesis report intends to bridge that gap of knowledge by finding out the degree to which misleading notions of gambler which is also called gambler’s fallacy exists and has a vital impact on the decisions of investors in Pakistan.