Open one of your projects. If you haven’t created one yet, you can do so by clicking on the big ‘+’ button, top left of the interface, choose ‘Movie’ from the menu and select the type of theme you’d like to use – if you’re unsure, choose ‘None’ and click on OK (you can change it later at any time).
Add a few clips from an Event of your choice to your project then click on one in the timeline to select it.
Read:
iMovie versus other low cost (or free) Mac video editors

In order to apply an effect, click on the Adjust button directly above the large preview section. You can also use the Menu Bar and go to Window > Show Adjustment Bar. Even better, type ‘3’ to activate its keyboard shortcut.
There are seven tools available, each represented by an icon. If you’re not sure what they represent, hover the cursor over them for a couple of seconds for a small yellow tag will pop-up, revealing the tool’s name.

Click on ‘Video and Audio Effects’ (the one to the far right of the list, just before the ‘Clip Information’ button). This presents you with two menus, one for video effects, the other for audio effects. Select the latter to open up a new window bearing nineteen different effects.
Click on one to select it. This automatically closes the window. You’ll notice the Audio Effect menu now bears the selected effect’s name.

You can of course click on the menu once more and select a different effect, but you’ll see that you can only apply one effect to a clip at any one time: selecting another removes the original – you cannot combine them. This also applies to the Video Effects menu.
Select that menu to see all available nineteen visual effects (just like the sound effect window, the first option ‘none’ removes any applied effect from your clip).

Before clicking on an effect this time, let the cursor hover over it for a few seconds. iMovie will load the effect the cursor is over into memory and display the selected clip with that effect applied, in the main preview window.
You can then move the cursor over other effects to get a convenient real-time preview of how your clip will be changed with the current selection (this also works with the audio effect window).

The problem with iMovie’s effects though, is that you have no control over them. Yes, you can only have one effect at a time, but there is no apparent way to alter the effect’s parameters to accentuate or make it more subdued.
There is however a way to apply the effect gradually over time which we’ll look at now. Move the cursor over the clip you applied an effect to then use the Command-B keyboard shortcut to cut that clip in two, at the playhead’s position.

In the Content Library section (bottom of the sidebar), select Transitions and choose the simplest one: Cross Dissolve. Drag it to the cut’s location to add it to your project. Right now, you shouldn’t see anything different, so select the first part of the clip and reveal the adjustment tools if they haven’t appeared automatically.
You can remove the effect by selecting the menu and choosing ‘None’, but a quicker method is to click on the curved arrow to the right of the Audio Effect menu.

Now, as you play your footage back, you can see the effect being gradually applied to your clip over time thanks to the transition.
By default, the cross dissolve transition is only a second long which may be too short. To change this, double click on the transition itself to reveal a duration field in the Adjustment Bar.
The transition duration will be limited by the length of the clips on either side of it.

If you like a particular effect and would wish to apply it to others, you may not fancy the idea of having to select each one, and manually set the effect menu to the correct style, each and every time.
Thankfully there’s a quicker and much more efficient way to do this. Start by selecting a clip which already has the effect applied to it, then go to Edit > Copy (you can also use the Command-C keyboard shortcut or control-click on the clip and select ‘Copy’ from the contextual menu).

Once done, select another clip and go to Edit > Paste Adjustments > Video Effect (or use the Option-Command-L keyboard shortcut). Notice that you can apply practically any changes from one clip to another thanks to that menu.
Even better, you can highlight more than one iMovie clip: click on one then shift click on another to select them and all those in between, or command-click each clip to select them individually.
Once done, use the above menu bar command to apply the same effect to all of them in one go.
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How to use effects in iMovie for OS X
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