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Okay, quick review time. Let’s throw composition out the window (for today, anyway) and take up exposure for a minute. If you’ll recall, exposure is all about light: the amount, duration, and intensity of the light hitting your medium, whether it’s film or a sensor. These things are covered by your aperture, shutter speed, and ISO respectively.
With all of the options those things afford to you, exposure compensation may seem a bit redundant. It’s not. It’s especially useful in situations with funky lighting (say, when you’re shooting against a brightly lit background, or shooting in snow or on a beach). Setting the exposure compensation can also help to make up for some of the camera’s quirks (i.e. if your camera tends to overexpose slightly when left to its own devices) and give you more control over the exposure.
Depending on your camera, you’ll be able to adjust exposure value (EV) by anywhere from two to five stops, in 1/3-stop increments. They’ll show up in your finder, or on your LCD, usually represented by decimal numbers: +/- 0.3, 0.7, 1, et cetera. Exposure compensation sometimes isn’t available when you’re shooting in manual, because if you want to over- or under-expose by a set number of stops, all you have to do is to instruct the camera to do that. If, however, you’re using Program or a Priority mode, exposure compensation’s a good way to be able to “set it and forget it.”
Let’s say you’ve chosen an EV of +1. The camera will tweak your settings depending on the mode you’re using, and the EV you’ve dialed in. So if you’re using Shutter Priority and you’ve set the shutter speed to 1/200 and the aperture would normally have been f/16, the camera will instead change the aperture to f/11. Conversely, if you’re shooting in Aperture Priority, it’ll keep the f/16 aperture, but change your shutter speed to 1/125.
So where does ISO enter into all of this? ISO is like an amplifier; it takes what’s already there and boosts it. Just the same as when you’ve got a Strat plugged into an amplifier and you get distortion once you’ve turned the volume up past a certain level, ISO can give you a similar kind of distortion — in the form of visible “noise” — as more gain is applied to the sensor. There are, of course, times when you really need an extra stop or two of sensitivity, such as when you’re shooting at night, or indoors, especially in instances when you’d rather not use a flash. Boosting your exposure compensation by a stop or two will brighten the photo, but it’s not going to change the sensor’s native sensitivity; only your ISO can do that.
If you’re shooting in bright light, or shooting on a tripod in low light using a longer shutter speed, you won’t generally need a high ISO. In the former instance, there’s enough light present already that the sensor doesn’t need too much more sensitivity,* and in the latter case, the duration during which light hits the sensor makes up for its lack of intensity.**
Since all of this may seem about as easy as Chinese arithmatic, let’s try to simplify a bit. If you’re trying to figure out whether the ISO or the Exposure Compensation is the solution, first be a bit more specific about the problem. Is it the amount of the light, or how the color and light are distributed within the frame? If it’s the former, adjust your ISO. If it’s the latter, tweak your exposure compensation.*** It’s going to take a bit of practice to figure out what each will do for (or to) your photos, and what works best for a given situation, but before too long it will become second nature to you.
*Although it can still be useful to add an extra stop of ISO if you’re shooting with a longer lens, or for any other reason that you might need a slightly faster shutter speed.
**Something else to keep in mind: very long shutter speeds will introduce noise to your shots because the sensor will start to heat up slightly. You may want/need to do a test shot or two just to see how your camera behaves, especially if shooting on the Bulb setting, and then tweak your settings accordingly. It may be that the tradeoff between sensor noise and ISO noise is an acceptable one to you, but that’s an individual choice.
***One final thought: Be careful when using exposure compensation in conjunction with higher ISO settings, since different EV’s can emphasize the noise and loss of detail that comes with using higher ISOs.
Okay, just one more thing: Exposure Compensation should not be confused with Flash Compensation. One controls the camera’s “input” (how it’s exposing the image), while the other controls the “output” (power) of your speedlight.