When do you use the word touché?

Answer 1

It is a term used in the sport of Fencing. It literally means "Touched", and is a scoring hit. It would be most frequently used in dialogue ("Touché ," said the student, finding himself outclassed by the newcomer.) But it might be used without dialogue:

The fencing class produced an occasional touché and quite a lot of muffled curses and groans from the out-of-shape beginners.

Answer 2

The word "touché" is used in a conversation to acknowledge a clever or effective point made by someone else, especially in a debate or an argument. It conveys that the opposing point has scored a hit or has made a valid argument.