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Definition

The difference between the purchase price of a share and its current market price. Another term for this is "market appreciation". The opposite of a paper loss. There is a potential danger in this figure, because it may not be possible to sell the shares at their market price - especially if they are "thinly traded". For example, in our company investment club, we purchased 430 Transaction Capital (TCP) shares for 2289c per share on 22nd October 2019. On 5th January 2022, those shares closed at a price of 4750c - giving us a paper profit of 2461c per share before dealing costs. Obviously, if we had chosen to sell those shares on 5th January 2022 we could have "realised" that profit, but we chose to hold onto the shares in the hope of further gains - but also with the risk that our paper profit could be eroded if the share price fell.

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