Efficient Market Hypothesis (EMH) considers the rational element in the financial market. But in the late 1980’s the psychological element emerged which affected the locus of control of the Stock Market. Stock market is a dynamic market and is influenced by many factors but now it has been recognized that cognitive errors and distortions impact financial investment options of the stock market. The cognitive errors are determined by an investor’s personality. This paper tries to explore the relationship between personality traits (Big Five Model) of investors and the psychological biases that affect the investment preferences of the financial market. It is well established from previous researches that we can enrich our understanding of financial markets by adding a human element. Much of the effort of behavioral researchers has been in uncovering new anomalies that cause us to think hard about market efficiency. These studies also create controversy because the implications of the results are subject to interpretation. This study extends the utility of the Big Five Model as an approach to examine the economic behavior of investors. In my present study it was concluded that the personality traits of investors affected the psychological biases and both factors in combination effected the financial decisions of the investment avenues available in the stock market making it more unpredictable and volatile.
