Whether purchasing or selling a diamond, it's important to understand how diamonds are evaluated with diamond shape and the 4 C's: carat weight, color, clarity and cut. Keep in mind a diamond cannot be evaluated by the 4 C's alone. Two diamonds could look the same on paper, but they will not actually look the same in person.
Diamond shape is the general silhouette of a diamond, not to be confused with a diamond's cut, which is explained below. Below are some common diamond shapes.
Diamond Carat Weight
Carat weight is the standard measurement of a diamond's size, but technically carat weight is a measurement of weight, not size. This means although two diamonds that are the exact same weight are generally the same size, the diameter (measured in millimeters) could differ slightly.
One carat is equal to 100 points meaning a 0.75-carat diamond is the same as a 75-point or three-quarter carat diamond.
Also note that the combined carat weight of a grouping of several smaller diamonds is not as valuable as a single diamond of the same carat weight. For example, 20 diamonds that are .05 carats each and total 1 carat is less valuable then one diamond that is 1 carat.
White diamonds are graded on a color scale of D through Z. D having the least color; Z having the most color. A color grade closest to D is most valuable.
Diamonds that naturally have color, which include yellows, pinks and blues, are called "fancy diamonds." Certain fancy colored diamonds are much sought after because of their extreme rarity. Their quality is graded by the intensity of the hue, and unlike white diamonds, the more color the rarer the stone.
Note that a white diamond that appears yellow is not considered a fancy diamond or yellow diamond, but instead it is considered a dark white diamond and is much less desirable and less valuable.
Brown diamonds are the most common kinds of diamonds found in nature. Although some retailers market them as chocolate diamonds with a hefty price tag, these are not very valuable and will not fetch much when re-selling.
Diamond clarity refers to the number of imperfections, or inclusions that exist within a diamond. Diamonds with the least amount and smallest inclusions possess the highest clarity and are the most valuable. Diamonds with a greater number and size of inclusions posses a lower clarity grade and are less valuable.
Virtually all diamonds contain imperfections or birthmarks, most of them too small to see with the naked eye. These inclusions, when viewed under magnification may look like dark sports, feathers, clouds or crystals.
Diamonds are graded on a scale of FL (Flawless) - I3 (Included). Diamonds that have no inclusions under 10x magnification will be graded as Fl (Flawless) and be higher in value while diamonds that have obvious inclusions under 10x magnification that may affect transparency and brilliance will be graded I1 - I3 (Included) and be much lower in value.
VS1 and VS2 - Very Slightly Included: Inclusions are minor and range from difficult to somewhat easy for a skilled grader to see under 10x magnification
SI1 and SI2 - Slightly Included: Inclusions are noticeable to a skilled grader under 10x magnification
I1, I2 and I3 - Included: Inclusions are obvious under 10x magnification and may affect transparency and brilliance
FL - Flawless: No inclusions or blemishes are visible to a skilled grader using 10x magnification
IF - Internally Flawless: No inclusions and only blemishes are visible to a skilled grader using 10x magnification
VVS1 and VVS2 - Very, Very Slightly Included: Inclusions are difficult for a skilled grader to see under 10x magnification
Diamond cut should not be confused with diamond shape. Regardless of its shape, a well-cut diamond determines its fire and brilliance. This is what makes a diamond sparkle. If a diamond is cut to ideal or perfect proportions, light will reflect and refract making it sparkle. If a diamond is poorly cut, or cut too shallow or too deep, light will escape out of the bottom or sides of the diamond making it appear more dull.
Below is a diagram of a diamond's cut from GIA.
Below is a diamond's cut proportion and how it refracts light.