Image caching is a little complex but we will put it in some simple actionable steps for you.

Essentially, Photoshop uses image caching in order to speed up the redrawing of high-resolution documents as you are working.

We won’t go into all the gory details, instead we will show you how to set the cache preferences based on your projects.

6. Edit > Preferences > Performance

7. Under the History & Cache heading you will see the “Optimize Cache Levels and Tile Size for:” option. This is the option we are interested in.

8. What you do next depends on how you are going to use Photoshop and the projects you will be working on. We have three different options, all of which are self explanatory: Web / UI Design, Default / Photos and Huge Pixel dimensions. Clicking on each option will update the cache setting on the right hand side.

9. As you can see, Photoshop will adjust the cache level based on the option you select. Here are some general rules to give you some pointers…

If you use relatively small files—roughly 1 megapixel or 1280 by 1024 pixels—and many layers (50 or more), set Cache Levels to 1 or 2. Setting Cache Levels to 1 disables image caching; only the current screen image is cached.

If you use files with larger pixel dimensions—say, 50 megapixels or larger—set Cache Levels higher than 4. Higher cache levels speed up redrawing.

You may not get high-quality results with some Photoshop features if you set Cache Levels to 1.

These are the official tips given by Adobe^^