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How to Compress Image Files to Speed up Site?

When a tool like GT Metrix or Web page test tells me to compress images, do they mean to make a picture go from 800 pixels to 700 to make it a bit smaller, or is there something else I should be doing? I know how to minify JavaScript and CSS files, but images are tripping me up. All of my images are in a JPG format, so not sure if PNG is a better option to improve the load time.

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