Scratch Trade
A scratch trade is one closed at or near break-even, usually because the idea stopped looking right. After costs it is often a small loss.
Not every trade ends as a clear winner or loser. A scratch trade is one closed at or near the entry price because the idea stopped working. Before costs it looks like zero; after costs it is often a small loss, which is why counting scratches honestly matters.
- Reading time
- 3 min
- Also called
- Scratch, Break-even exit, Flat trade
- Updated
Scratch trades in plain words
Fees and costs shrink the money that's actually invested, so a trade closed at its entry price still loses those costs.1
Small fees may not look like much, but over time they add up.1
Hanging on to a loser in the hope of breaking even isn't a plan; a planned scratch is the opposite — a quick exit when the setup fails.2
How to handle scratch trades
Define a scratch
Set a band, such as within ±0.1R, that you count as a scratch.
Know the cost
Include Bid-Ask Spread, fees and Slippage in the result.
Exit when the reason fails
Scratch when the Trade Setup and Entry Trigger is invalidated, not on a whim.
Log them separately
Record scratches in your Trading Journal with the reason.
Watch the count
Fees may seem small but can have a major impact over time.1
Review the rule
Check whether scratching improves your Expectancy or just cuts winners.
Worked examples
Example 1 — Costs make it a loss
Small lossA hypothetical trade is closed exactly at entry.
| Price move | 0 |
| Costs | −0.05R |
Fees reduce the money earning a return, so the 'flat' trade is a small loss.1
Example 2 — Smart scratch
Risk savedA hypothetical breakout fails to follow through and is closed near entry.
| Planned risk | −1R |
| Actual result | −0.05R |
Exiting early saved most of the risk instead of hoping to break even.2
Example 3 — Too many scratches
Costs add upA hypothetical trader scratches 30 trades in a month.
| Cost per scratch | −0.05R |
| Monthly total | −1.5R |
Small costs add up and can have a major impact over time.1
Scratch trade vs full stop-out
| Aspect | Scratch trade | Full stop-out |
|---|---|---|
| Exit point | Near entry | At the stop |
| Typical result | Small loss after costs | −1R |
| Trigger | Setup invalidated early | Price hits stop |
| Risk if overused | Cutting winners | None extra |
Where scratch trades are used
Failed breakouts
Leaving a Breakout that stalls.
Scalping
Quick exits are common in Scalping.
Break-even stops
Being stopped at Break-Even after moving the stop.
News risk
Flattening before an Federal Open Market Committee release.
Advantages and disadvantages
Advantages
- Limits losses when a setup fails early.
- Frees capital and attention.
- Keeps risk smaller than a full stop.
- Encourages active trade management.
Disadvantages
- Costs make most scratches small losses.
- Overuse can cut future winners.
- Many scratches add up in fees.
- Hard to define without a clear rule.
Going deeper
Read as far as you need. Each level builds on the one before it.
What it really costs
Beginner
Even with no price move, costs eat into what's left, so a scratch still costs the spread and fees.1
Discipline vs hope
Intermediate
Hoping to get back to breakeven isn't a strategy.2 A scratch exits on a rule instead.
Measuring impact
Advanced
Because small fees can have a major impact over time, compare your Expectancy with and without scratch exits to see if the rule earns its keep.1
Common mistakes
Calling it zero
Costs make it a loss.
Scratching from fear
Exit on rules, not nerves.
Not logging them
They hide in the stats.
Scratching every winner
Good trades need room.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- A scratch exits near entry.
- Costs usually make it a small loss.
- Scratch on rules, not fear.
- Log scratches separately.
- Check that scratching helps expectancy.
Frequently asked questions
Is a scratch a win or a loss?
Should scratches count in win rate?
Why not just hold to the stop?
Further learning
- Trade Management
Managing open trades.
- Break-Even
Stops at entry.
- Slippage
Hidden costs.
- Expectancy
Measuring the effect.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- SEC Office of Investor Education and Assistance (Investor.gov). How Fees and Expenses Affect Your Investment Portfolio – Investor Bulletin (opens in a new tab) Checked .
- CMC Markets. Common trading mistakes: 10 errors UK traders should avoid (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.