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In this tutorial, Sean from Tracker Software explains how to add watermarks to documents using PDF-XChange Editor. Watermarks are used to protect documents, indicate ownership, and discourage counterfeiting. To add a watermark, go to the organize tab, click on the watermarks drop-down menu, and then select add. You can choose between using an image file or custom text for the watermark. The text can be customized with different fonts, alignments, and macros. This feature is useful for various purposes in document management.