Sgraffito is a particular way of carving.  It usually involves applying a colored layer to your pottery and carving into and through the colored layer.  As you carve your design, you reveal the clay body underneath the colored layer.  The carved design then sits in contrast with the colored layer.

You can use sgraffito as a way of decorating pottery on  greenware or bisque ware.  And the color is normally applied using underglaze, colored slip, or engobe.  Engobe is similar to clay slip, but it has a lower clay content and contains fluxes so it melts a little when fired.

This is an overview of how to use the sgraffito technique on leather hard clay.  If you’d like a full account of how to make sgraffito, check out my guide on how to make sgraffito using greenware and bisque pottery here.

The Pottery Wheel provides an example of this technique.

As with the carving method described above, I find it best to make sgraffito when the clay is soft leather hard.  If you wait until the clay is quite dry, it can be crumbly and hard work to carve into. Also, there is a risk that the slip, underglaze, or engobe will flake a little at the edges where you carve.  So, you don’t get such a nice clean line.Make your piece of pottery and allow the clay to firm up.  Then apply the color in whatever way you prefer.  You can then draw your design onto your pot lightly with a normal pencil.  Any marks that are not removed when you carve will burn away in the kiln. Once you have an idea of where your design is going to go, you can carve away your image using your carving tools.  Some tools that are good for sgraffito are:

• Mini ribbon tools
• Carving/sculpting tools
• A stylus tool

However, you can improvise and use whatever tool works for you.  When making sgraffito, it helps to decide if you want the color or the exposed clay to be the focus of the design.  And it’s useful to remember that black and dark colors will recede in a design. This means that if you use black underglaze or slip, and carve out a design, your eye will be drawn to the design rather than the dark-colored areas of the pot.

Once you have carved your design, allow the pot to dry slowly, and then bisque fire it. 

Afterward, apply a clear glaze and glaze fire it. 

Reference -  thepotterywheel.com -