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It also has another function, if you long press it (about half a second), you will put that follower into the 'command mode'. Press it to toggle your follower as waiting or following, depending on their current state. The 'command' key is a little bit different. Look at your follower, press the key, and they will open their inventory.
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The 'trade' key is pretty self explanatory. Follower Hotkeys will register with MCM, at which point you can set two different keys a 'trade' key and a 'command' key.
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