Most heterosexual folks know the difference between homosexual and bisexual, but to be on the safe side, let's address that topic. Bisexuals are persons whose partners can include both sexes.
Many people confuse transsexuals with homosexuals, especially with male homosexuals in drag.
Drag queens can be homosexuals, but transsexuals dressing as women are not necessarily drag queens. Actually, transsexuals are persons who have a deep, unshakable conviction that their true gender identity is out of synch with their anatomical sexual identity. Male transsexuals identify with the female sex, and female transsexuals with the male sex. Psychology has many theories about the complex process regarding the development of one's gender identity as it corresponds to one's male or female genitalia. There are no set answers as to why a person born female eventually comes to identify with and believe that they are male, and vice versa.