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I just encrypted my entire hard drive with truecrypt and was wondering can I still defrag it?

Or will that not work anymore or break something.

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Usually, yes you can since the encrypting file system is presenting itself as a traditional file system to Windows and unaware applications.

The larger question is what do you plan to gain with defragmentation since it was conceived when systems were older and slower and fragmented volumes could impact systems performance.

If you're striving to max out your systems performance, defragmentation is the bottom of the list as far as return of investment.

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Agreed, unless the encryption software implicitly says not to do it, you should be safe. – Keltari May 9 '13 at 3:47
For Windows and SATA based drives, I beg to argue about performance and fragmentation. Working on Windows machines for years now, fragmentation has always been on the top of my list I've seen to be the main cause to slow a system down. – Jake Anderson May 9 '13 at 4:10
And you have the benchmark results of improvements of defragged file system b4 and after ? Because the misconception of defragging is legacy thinking from Microsoft who doesn't offer even approximate benchmarks of performance improvements. The Pagefile, another useless superstition from a time that RAM used to cost $100 a MB and just a spacewaster. I don't care what your results are if you plan to post them, but rate your drive pre defrag then rerate it and you won't see a performance improvement. – Karen3819x4 May 9 '13 at 4:49
What is your defrag method anyway, which app and how are you performing it cause i bet you're making the first mistake in the method that isn't even effecitively defragging anything. Share your tool and style, the worst that can happen is I'll learn you about what you're doing wrong and you can rest in the comfort of misconception. – Karen3819x4 May 9 '13 at 4:50
I make use of MyDefrag. Paid wise I like PerfectDisk. I've always seen massive improvements on app start time and responce times on boot up with a defrag. – Jake Anderson May 9 '13 at 6:58

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