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Warm the pan and add the onions. Make sure you have chosen a frying pan that will hold your onions snugly, but still gives you plenty of room to stir. Place the pan on your burner over a medium heat and add the oil or fat called for in your recipe. Then add your onions along with a pinch of salt.
Sweat the onions. The first stage is called sweating and usually happens very quickly. You are cooking the onions by maintaing a high enough heat to get them going, but not so high that they begin to brown. The heat and the salt will draw the moisture out of the onions, thus 'sweating' them. Onions will also start to glisten and look wet (ie, "sweaty"!). It sometimes helps to cover the pan at this stage to encourage the release of moisture, but be sure you check your onions and stir them frequently. Sweated onions are never browned.
Cook until translucent. If you keep cooking the onions for another few minutes, they will start to lose their opacity and become come translucent. The moisture will evaporate and the onions will wilt further. Keep stirring and adjusting the flame so that the onions cook, but again, do not let them brown.
Cook until golden or brown. In a few more minutes, the onions will start to take on some color. They will get slightly golden around the edges and start to have a sweet, slightly caramel-like aroma. The golden color will eventually deepen into brown
Cook until caramelized. Keep cooking the onions, stiring frequently, until they are brown all over and completely limp. Caramelized onions take some time — anywhere from 20 minutes to 45 minutes total cooking time depending on how deeply caramelized you like your onions. A browned glaze will develop on the bottom of the pan. When you judge your onions to be done, splash a little water or wine into the pan to dissolve the glaze. The water will bubble furiously. Stir and scrape until all the water has evaporated. If you want super dark onions, you can repeat this process again. Caramelized onions are completely soft and have a rich, dark color. They will have lost all their pungency and taste sweet.