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Windows Movie Maker, like any video editing software, is designed to alter and arrange video and audio clips. Part of this includes adding video effects, which allow you to customize those clips that you are including in your project. Though the effect system in Windows Move Maker is much simpler than those found in high level non-linear editing packages, you still have the ability to have some creative flare.
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Decide What You Want Ahead of Time
Before you begin adding effects to a specific video clip it is important to isolate exactly what piece you are going to be using. You do not want to alter a base clip because you may not want all of it to contain that video effect. The best way to do this is to go through the clip, find the exact sub-clip you want to use, and then put that in the correct location in the Timeline.
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Once it is here you have a better avenue to add video effects. There are a couple of ways you can begin to add video effects or transitions. The first and most standard way is to highlight the clip and then go to the Tools menu. From here you can select either Video Effects or Video Transitions. For each you will get a whole list of thumbnails of what that video effect or transition will look like. These effects are applied to the common image of the grassy plain that is a trademark of Microsoft. From here you can simply drag and drop the image of the effect or transition onto the video clip. Now the video clip will contain it.
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A Faster Method
The second and faster way is to right click the clip and then select Add Video Effect. From here you will get a menu designed so all of the video and effects are on the left, and all those held by the specific clip are on the right. Here you can select an effect on the left, click the Add button, and it will go to the right. All those on the right will end up being on the clip. This is also the way in which you would remove the effect or transition. When on the right you can highlight it and then click on the Remove button to send it back to the left hand side. This effectively removes it from the clip all together. The right click method is much faster, and it even has the ability to add a Fade In or Fade Out transition without going into any complicated menus.