To understand why you might need to adjust the white balance in your camera, you first need to understand color temperature.
Adjusting the white balance basically means making sure that a part of the picture that is supposed to be a neutral color does actually contain equal amounts of red, green and blue. We call it white balance but it works equally well with light gray parts of the scene, however generally speaking the lighter the better. If the gray parts of the picture are indeed rendered gray then it follows that all the other colors in the scene will be rendered in a natural looking way.
On the right you can see the effect of right and wrong white balance in a composition with delicate colors. The more pastel the colors in the scene the more important it is to get the white balance correct.
On most modern cameras we have an AWB (automatic white balance) setting, various fixed color temperature settings such as 'daylight', 'tungsten' and 'flash' and, on the better cameras, and a custom setting.
Most of the time we can set the white balance to automatic and forget all about it. Normally I do not lose too much sleep over the white balance setting of my photos as, provided it is not too far out, the color balance can be changed in the computer. The auto setting gives a reasonably accurate rendition in daylight or with flash and the odd tweak in the computer is no great hardship.
If I was going to shoot pictures indoors without a flash then I would definitely set the WB to the 'indoor' setting, as the difference in color would be too great to ensure good color in the editing. However, 99% of the time, like most people, I either shoot in daylight or use flash.
There is though, no substitute for getting it right in the camera and it can sometimes save you a lot of work later on. Every now and again I get involved in mass portrait sessions where I shoot 500 or more portraits in a couple of days. Allowing myself 3 or 4 shots per person, I can end up with as many as 2000 pictures to process. The last thing I want to do is worry about the color balance of that many shots, so making sure it is right in the camera is important. In this case I would use the 'custom' setting to ensure a consistent color on all pictures. Using the custom setting is easier than it might at first appear, basically all you have to do is take a photo of something white or light gray under the lighting you are going to use. If you are doing portraits then get the sitter to hold a white or gray card while you take the first picture, filling the frame with the card. Then, refer to the instruction book of your camera to find out how to import the white balance from this picture into your custom setting. The white balance, once set, will remain until you overwrite it with another setting. So, provided the lighting does not change, all your pictures will be properly balanced.
White Balance Settings in the Camera
Here's chart showing the different white balance settings on a typical SLR camera. Your camera may have more settings than this or less or even slightly different ones.
AWB (automatic white balance) is the default setting and the one you should use most of the time. Daylight, shade, cloud, flash and tungsten are all fixed settings that you can use under the appropriate lighting conditions. Have a look at the color temperature chart to understand what they do. Basically they are like the old filters that users of film would screw onto the front of their lenses to compensate for different color temperatures. The advantage of using these fixed settings as opposed to the AWB is that a predominance of one color in your scene will not cause the camera to give a false reading.
The 'fluorescent' setting is slightly different in that it is not part of the color temperature scale. Fluorescent tubes are basically balanced for daylight as far as the yellow/blue scale is concerned, but they tend give out too much green (or not enough magenta) light. There are many different types of fluorescent tubes so this is a bit of a sweeping statement and you should test each situation, but if you are shooting in an office or factory, lit by fluorescent light, this setting can get you out of trouble.
The 'custom' setting I have discussed above and is also covered in the article on the gray card .
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Other tutorials in this section
An introduction to the color temperature scale.
How to set up your camera's manual white balance.
Using a gray card for color balance and exposure measurement.
Ever had the problem of washed out colors, either on a print or on the screen? The chances are the reason for it is that you're using the wrong color space