please tell me the steps to set up a proxy server?

Your question is to broad.

What kind of proxy server are you using. They are plenty of them.

There are appliance proxies (like Blue Coat) and Proxy servers like Squid.

Also important is where you will put proxy in your network. You could put it in trust zone, but best way is to put it in DMZ zone.

There is also combination of using proxy in trust and that trusted proxy is using parent proxy in DMZ.

There is cache, proxy which is caching web content and saving your network resources.

There are also proxies that are antivirus servers. They check content and make url filtering. There are combination of them.

Blue Coat proxy has many options, it could even look https content and look what is behind it and filter it.

It could make time restriction of particular user on particular sites...

So, as you can see seting proxy is not so easy topic.

Since giving detail info may fill up a few pages, check out this link, its very informative and does a good job explaining.

http://www.linquist.net/geek/proxy

Good luck

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