This subject is a little complicated. To fully appreciate what auto ISO does, you have to understand the advantages and disadvantages of changing ISO as well as the affect shutter speed has on your images. If this is beyond you right now, keep reading and just use the settings I recommend. Even if you don't understand it all yet, it will help you get better pictures consistently. For background, read What is ISO and ISO and Digital Noise as well as How to Choose a Shutter Speed Part One and Two.
Recent Nikon cameras (I don't know for sure about Canon) have an "auto" setting for ISO that allows you to set a range for your ISO and then never think about it again. That's too strong. With auto ISO you hardly ever have to think about your ISO setting. When turned on, auto ISO works by starting at whatever ISO you have set and gradually bumping it up if there isn't enough light in the scene you are photographing. Additionally, you can set a maximum so that your camera won't take your ISO higher than you are comfortable.
Here is how to set it on a Nikon D40:
- Push the "MENU" button on the back, navigate to the "Custom Settings Menu" (the pencil), then select "10 ISO auto." Select "On" and push "OK."
- Then select "10 ISO auto" again. This time select "Max. sensitivity" and choose the highest ISO that doesn't produce enough noise to bother you. (Read ISO and Digital Noise if you need help deciding. I would choose 800 on the D40.)
- Then select "10 ISO auto" again. This time select "Min. shutter speed" and choose the minimum shutter speed that would produce sharp images with your lens. (Read How to Choose a Shutter Speed Part One and Two if you need help deciding. I would choose 1/30s or 1/60s depending on the lens. Choose 1/60s if you have a VR telephoto lens and don't want to ever change your ISO again.)
- Push the "MENU" button on the back, navigate to the "Shooting Menu" (the camera), then select "ISO sensitivity." Choose the lowest number there is (200 on the D40, 100 on some other cameras.) Ignore the "Auto" in this menu - it's not the same thing.
Here's what will happen: your camera will shoot at it's "base ISO" (which you set in step 4) most of the time. When it's too dark and your shutter speed starts to slow down, it won't go slower than whatever you set in step 3. Instead, your camera will increase your ISO, but it won't go past the maximum you set in step 2. This is great because it allows the camera to make the decision you would make without you having to do anything. You have enough freedom to limit the camera's choices, but you also get to take advantage of your camera's intelligence.
If you can't see "10 ISO auto," read Expanding the Menu.
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