A scratch is a trade closed at or near its entry price. Nothing went badly wrong. The stop was not touched. The trade was opened for a reaction, the reaction did not come, and the position was closed for a small loss or a small gain.
A scratch is a third kind of exit
A stop says the idea was wrong. A target says it was right. A scratch says it was not proven either way in the time allowed. The trader expected price to turn at a level, and price sat there. The evidence the trade needed never showed up, so the reason for holding it is gone.
It is close kin to the time stop, described in exiting on the clock. The time stop is the rule. The scratch is often what the result looks like.
A scratch is not free
On an option, a trade closed at the same index price it was opened at still loses money. The spread is paid on the way in and out. Commissions and fees are charged on both sides. Time value has drained while the position was open. A scratch is a small loss by construction, and the spread as a share of the premium shows how small or how large.
Scratch versus breakeven-itis
There is a bad habit that looks the same on a statement. A trader in a working position gets nervous and closes at entry to avoid giving anything back. That is breakeven-itis, and it cuts winners.
The difference is when the decision was made. A scratch follows a condition written before the trade: if there is no reaction at the level within a set time, close. Breakeven-itis is decided inside the trade, by how the position feels. One is a rule being followed. The other is a rule being abandoned.
Recording it
A scratch belongs in the journal as a trade, with its reason and its exit type. Left out, the record shows only wins and losses, and the costs of all the trades that did nothing disappear from view. Keeping a trading journal covers the wider habit.
Over time the scratches say something. If they cluster at one kind of setup or one time of day, that setup or that hour is producing trades without follow-through.
When a scratch is the wrong exit
A trade that is working slowly is not a scratch. If price is moving the right way, the reason for the trade still holds and the deadline has not passed, closing at entry is impatience. The test is the written condition. If it has not been met, the position stays.