In the editing window, right-click over the code of the image you want to compress (or convert to a JPEG) and select Preview Image.
Click Convert. This brings up HotDog's Image Lab.
Within Image Lab, click the JPEG radio button
Check the Automatically Preview checkbox to get constant updates on how your image appears. (Alternatively, click the Preview button after making your changes.)
Click the JPEG Compression tab - you may need to maximize the Image Lab window to do this.
Use the compression slider to change the compression of your image. Keep an eye on the Image File Size caption to see how much your image is compressed.
Click Save As to save your new image.
This slider sets the level of compression used on your JPEG image. If you use full compression your image noticeably degrades. So, as you increase the compression, keep an eye on the image file size and image preview. This will allow you to gauge the optimal image quality against the image file size.