| > > Theory of what? Do such people exist?|
> > > I have my own theory but I would like to know what your opinion is
> Transgender= people who are born as a boy but live as a woman or a woman who lives as a man....what I would like to know is why
That's not really true. Transgender is the blanket term for people whose personalities, organs, or whatever, are different from the gender role that society would apply to them. This includes transvestites (those who simply dress as the opposite sex - nothing more about their sexuality is defined by this action alone), transsexuals (which is what you defined), some intersex individuals (those without definitive physical gender signifiers such as sex organs), and others.
They exist because not everybody is born with the same type of body or same type of mind.