Photoshop Tip: Speed Up Your Work with Scratch Disk
A scratch disk is an area of the hard drive that’s used as storage to help Photoshop handle large images. Scratch disks help to ensure efficient results when editing high-resolution pictures. If possible, the disk should be on a separate hard drive from Photoshop and your Main OS. Our tutorial below explains how to go about setting up such a disk
1.Open Scratch Disk Options
In Photoshop, click edit > preferences > plug-ins > scratch disks. This is the same for both Mac and PC versions of Photoshop.

2.Define The Location
This is the standard scratch disk option screen. All you have to do is define where the scratch will be, with up to four locations. By default it will use your main drive.

3.Choose a Drive
Select a drive from the list available. Ideally, it should not be the C: drive (where PC’s virtual memory resides). The images being edited should not be on the scratch disk either

See also: Photoshop Tutorials
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wow i never knew, thanks!