What do we mean by booking profits in shares?

A person buys shares at a certain price 'X'.

Suppose after a few days the price of the shares shoots up to value 'Y'.

Now the person sees that the difference 'Y-X' is substantial, so he decides to sell his shares at the Market Price of Y.

The act of selling shares at a price which is above the price at which they were bought is termed as profit booking. Normally when one sells shares the transaction is completed after 2-3 days. But the price that the person is deemed to receive is the price at which the transaction was done.

The difference between Y and X i.e. 'Y-X' is called the Booked Profit.