When to Change White Balance
First things first: white balance has nothing to do with caucasians on stilts. No, white balance affects how your camera's sensor captures color.
Here's a (potentially) surprising fact: all light is NOT the same color.
The reason that this might be surprising is because our eyes automatically adjust to different lighting conditions so that we are able to see "natural" colors all of the time. Without a camera in your hand, morning light looks an awful lot like mid-day light.
But the color of light changes throughout the day, and it especially changes when you're taking photos in shade, overcast conditions, or under artificial lights.
The Color of Light
In the early morning hours, natural light is cooler and objects photographed with your digital SLR will take on a faint blue hue. Right around mid-day, the light takes on a neutral tone, but as the day wanes toward dusk, light becomes warm and you'll notice more orange and red in your photographs.
If you're ambitious enough, you can do the following exercise: pick a day when you don't have anything planned.
Get up in the morning before the sun comes up, set up your camera and tripod and take a photo of some outdoor subject (any subject you like really). Here's the hard part: take another photo of the exact same subject from the exact same position every two hours for the rest of the day.
What this sequence will show you is that the color of light changes as the day goes along and these color shifts can have an impact on your photos.
White Balance to the Rescue!
The white balance setting on your digital SLR is meant to counteract these color shifts. When the white balance is set to AUTO mode, the camera is trying to determine the lighting conditions and then set the white balance so that the colors in your photo don't appear to have any tint.
An extreme example of this is when you take photos lit by tungsten light (regular old run-of-the-mill lightbulbs) or by fluorescent light.
Tungsten light adds a strong orange cast to colors, while fluorescent light makes everything look a sickly green. If you were taking portrait photos with these types of light, your subject's skin tone would not look natural at all.
When to Change White Balance Yourself
While many digital SLRs are quite good at guessing the lighting conditions, sometimes it's a better idea to take matters into your own hands. This is why white balance can be changed manually.
For example, shade tends to make colors look soft and muted. But if you're taking photos in shade and set your white balance to "shade" then suddenly those colors will look rich and saturated. When taking photos under tungsten light, set the white balance to "tungsten" to make sure that all colors look normal.
I've already touched on some of them, but here's a list of the most common digital SLR white balance settings: AUTO, natural (daylight), shade, overcast, tungsten, fluorescent and flash.
Many cameras also have a "custom" white balance setting, but this is only necessary if you want to be 100% sure that the light striking your subject is not affecting the colors in any way (in other words, it's used more by professionals than the everyday photographer).
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