This may seem like a fairly simple question, but it can be confusing if you fail to break it down into the proper steps. Stock trades generate dollar profits and/or losses, which are measured in percentages. Let's use a simple example to illustrate:
Suppose an investor buys 100 shares of Cory's Tequila Company (CTC) at $10/share for a total investment is $1,000. Now suppose two months later the investor sells the 100 CTC shares for $17/share. They receive $1,700, and their profit for the trade is $700.
A profit of $700, however, means very little to an investor, unless they know how large of an investment was required to earn that $700. For example, suppose the investor had also bought 1,000 shares in Rob's Sake Distillers (RSD) at $10 apiece (for a total investment of $10,000), and later sold the 1,000 shares at $10.70 each per share, or for a total $10,700. With this trade, they would have profited by $700, yet it took ten times the investment compared to CTC to earn it.
To avoid this sort of profit ambiguity, investment returns are expressed in percentages. The CTC investment was made at $10/share and sold at $17/share. The per share gain is $7 ($17  $10). Thus, your percentage return on your $10/share investment is 70% ($7 gain / $10 cost). This 70% return would be the same if they had invested in 100 shares or 100,000 shares, provided all the shares were bought at $10 and then sold at $17. By multiplying the percentage return on the investment (70%) by the total dollar amount invested, investors will know how much in dollar terms they have made on this investment (70% return on $1,000 in $1,700 providing a dollar gain of $700).
Using this method, your RSD investment would have yielded only a 7% return ($0.70 gain / $10 cost). So, even though your RSD gain of $700 (7% x $10,000) is equal to your CTC gain, clearly CTC's return is much higher at 70% compared to 7% for RSD.
(Now that you understand how to measure stock investment profits and losses, learn how setting predetermined limits on your profits and losses can improve your investment performance by reading

What's the smallest number of shares of stock that I can buy?
The answer to this question is not as straightforward as it seems. Many people would say that the smallest number of shares ... Read Answer >> 
If one of your stocks splits, doesn't that make it a better investment? If one of ...
Unfortunately, no. To understand why this is the case, let's review the mechanics of a stock split.Basically, companies choose ... Read Answer >> 
Do I receive the posted dividend yield every quarter?
First things first: a company with common stock that pays a dividend will typically distribute the dividend every quarter. ... Read Answer >> 
What does it mean when someone says that a stock went up X points? Does this refer ...
For stocks, one point equals one dollar. So when you hear that a stock has lost or gained X number of "points", this is the ... Read Answer >> 
How do you calculate the percentage gain or loss on an investment?
Calculating the percentage change of your investment is quite easy. All it takes is a little bookkeeping and either a simple ... Read Answer >>

Trading
A Beginner's Guide To Hedging
Learn how investors use strategies to reduce the impact of negative events on investments. 
Investing
Investing $100 a Month in Stocks for 20 Years
Learn how a monthly investment of just $100 can help build a future nest egg using properly diversified stocks or stock mutual funds. 
Investing
Calculating The Gain Or Loss On An Investment
Calculating the percentage of change in an investment is easy. Take the amount the investment gains and divide it by the amount invested. 
Managing Wealth
Understanding Total Returns
Total return measures the rate of return earned from an investment over a period of time. 
Trading
Choosing Between DollarCost And Value Averaging
These are two investing practices that seek to counter our natural inclination toward market timing by canceling out some of the risk. 
Investing
Defining the 3 Types of Investments
The first step to being a successful investor is knowing what is and isn't an investment. 
Financial Advisor
5 Questions First Time Investors Should Ask in 2016
Learn five of the most important questions you need to ask if you are a new investor planning on starting an investment program in 2016. 
Financial Advisor
How to Know When to Pass on an Investment
Knowing what to invest in is important, but knowing what not to invest in is equally important. Here's how to decide when to walk away. 
Investing
The Art Of Selling A Losing Position
Knowing whether to sell or to hold is tough. And no rule fits all. Find out what to consider.

Compound
The ability of an asset to generate earnings, which are then ... 
Total Return
When measuring performance, the actual rate of return of an investment ... 
Return
The gain or loss of a security in a particular period. The return ... 
Expected Return
The amount one would anticipate receiving on an investment that ... 
Rate Of Return
The gain or loss on an investment over a specified period, expressed ... 
Investing
The act of committing money or capital to an endeavor with the ...