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The most common problem with party photos is the poor lighting. In most cases, the lighting is too low and using flash may be too harsh. You may try to remedy this by changing your settings to ISO 800 or higher if you have that option on your camera. Some cameras have a "Party" mode, so you can test that out as well. If you want to take a photo of a posed group, you may be able to do so without flash. Changing your aperture to a smaller number will focus in on the foreground and give you the blurry background effect. When using the flash for candids or more active subjects, avoid getting too close so that the flash appears less harsh.
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Candid photos can really capture the essence of the party. Using the lighting tips from above, approach the scene you want to shoot and take several photos as it happens. If it involves people having a conversation, you'll need all these photos in order to go back and find one where everyone's faces aren't caught in an odd expression. Laughing is often a good time to snap photos, and you'll always get the most natural smiles that way. If you are taking posed photos, don't just line everyone up. Arrange them closely and try to have different levels, whether you use steps or an incline. Parties are also an opportunity for fun photos with silly poses. Find an area with a neutral background and good lighting, and invite people over to take fun photos. This doubles as a great way to chronicle who attended the party.
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While you're shooting, don't focus only on the people. Catch the details as well, whether it's the food, the decorations, or the location. These images can add a lot of personality to the party photos and will honor the time spent preparing for the event. Snap a shot of table spreads, party favors, and anything else that gives a sense of what the party is celebrating. If you're at a graduation party, take a photo of the graduate's mortar board cap or diploma. If it's an engagement party, get a photo of the ring.