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In this tutorial, Sean from Tracker Software demonstrates how to add watermarks to documents using PDF exchange editor. Watermarks are useful for protecting documents and indicating ownership. This can be done using text or image formats. To add a watermark, click on the organize tab, then the watermarks drop-down menu, and select add. Customize the watermark using either an image file or custom text. Adjust the font, alignment, and other settings as desired. Macros can also be utilized for added customization.