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Match
Match
Firstly, note the Save Image button 
in the toolbar (File menu: Save Image [⌘I]), where you can save the image. Clicking this would save your image as a .bmp. This file type allows paletted images to be saved, in case you want save the image as it is now, but generate the output later. This option should be enabled once you have clicked Match.
The Match process is fairly straightforward: the Reduced image from the right-hand pane of the Image tab is brought forward to the left-hand pane of the Match tab, and a further viewable comparison can be made between the Reduced image and one matched to your chosen range and number of threads.
You can choose the manufacturer and type of threads you wish to use. Then you can choose your preferred number of colours. As a rule of thumb, 40 threads might be a workable number - although you might find that even that number is too great. You should aim to find the smallest number of colours from your thread range without adversely affecting the appearance of the image.
Then click Match (Process | Match, or ⌘M).
The image as it would appear in that range of threads appears to the right.
Again, you can resize the app's window to examine and compare the two in more detail (as in the above screenshot). If you wish to adjust the number of colours further (either up or down), change the value and click Match again. Repeat until you are as happy as you can be with the results.
Bear in mind that the Match process almost invariably produces a result with less colours than you actually specified. This is because more than one shade may correspond to the nearest thread.
After clicking Match, the Merge button is enabled. This is an optional process which may further reduce the number of colours with which you're working. Since it is optional, the Next > button will already be enabled.
It is assumed that any colour occupying less than half a percent of the whole image is unlikely to be a significant loss to the overall picture if merged with its nearest neighbour; but it gives you the option to reject the suggested substitutions - either individually or collectively.
The screenshot below shows the dialog presented when selecting Merge. The initial value of the threshold is calculated as 0.5% of the total stitch count in the image - unless there are any dominant colours in the image (for example, a background colour) - in which case it excludes those in the calculation, otherwise significant colours might be impacted. In this instance, it is assuming that any colour with less than 532 stitches will have a negligible impact if merged with its nearest neighbour. The first column shows the number of stitches of that colour in the image as it stands. At the top, it identifies how many colours are currently selected for merging.
The threshold may be changed if required, to include more or less 'insignificant' colours - simply click the Apply button once you've changed the threshold value.
If you don't like a suggested merge colour (as per the second, fourth, seventh and eighth entries in the screenshot), and prefer it to remain in the image, you can deselect that colour by clicking twice on the corresponding arrow (once to select that row, and once to deselect that colour substitution). The arrow will change to a cross, signifying any colour not to be merged. This can be unset by clicking it again (twice if you have clicked on another row in the meantime). Bear in mind that there may be other colours to be merged that are not shown - make sure you scroll down to the bottom before clicking OK. The Colours for merging prompt at the head of the window is an indicator of the number of colours which will be merged if you click OK without review and intervention.
By clicking the OK button, you are opting for those colour substitutions, where the arrows are present, to be made, and the palette reduced accordingly. To reject the whole Merge process, simply click Cancel, and the image will retain all of those colours.
Once you're happy with the results, you can proceed to the Symbols tab.