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Finite size targets with complex structure such as aircraft present to a radar several reflecting surfaces distributed in space, and these surfaces will move randomly in respect to the radar with the normal yaw, roll and pitch of the aircraft. The resulting random wander of the apparent source of the target echo causes a corresponding fluctuation called target noise in the output of the radar angle-error detectors and a wander of the radar antenna during closed-loop tracking of the target. This wander is called tracking noise. The tracking noise, caused by a finite size target, internal noise and other noise sources, can be minimized by choice of the parameters of the radar AGC (automatic gain control) circuitry and servo-system. Previous papers published on this subject were restricted to open-loop analysis and with assumption of negligible tracking error; however, the analysis in this paper includes actual closed-loop tracking data of a practical tracking radar and shows that under practical tracking conditions a short-time-constant fast-acting AGC will minimize tracking noise. Furthermore, it is shown that the servobandwidth should be kept at the minimum value that is consistent with tactical requirements.