RAW vs JPEG

As you learn to capture images one of the basic questions you may have is what is the best way to capture an image, RAW or JPEG.  If you are trying to get the best out of your image it's important to understand what shooting RAW has to offer.  There is nothing intrinsically wrong with shooting JPEG, they are mostly what we see as photographs.  When you shoot JPEG a lot of information is thrown out when creating the file from the original data that is captured by your camera's sensor.  This makes it practically impossible to recover data that may be lost.

If you retain the RAW file, then the key elements and data are retained for you to process your images with software such as Adobe Lightroom or Photoshop.  An example of why this is good is with a RAW image you can recover details from shadows, which can not be done with a JPEG file.  Another example, when an image is captured in RAW the white balance setting is embedded in the file but you retain the ability to change that with your software, with JPEG you can not.

Pros and Cons

RAW
Pro
Retains full image quality
You control which image data is kept from the surplus available
Better processing on the computer than in-camera
Can often recover exposure loss in the shadows and highlights
Impossible to overwrite by mistake

Con
Large files need more storage space
Not an image file, requires special software to view
Saving large files in-camera may slow down shooting
Processing on computer takes time

JPEG
Pro
Less storage space
Immediately available (printing, uploading, etc)
If perfectly exposed, as good as a processed RAW file

Con
All other image data is discarded
Has some slight image artifacts
No processing headroom means no way of recovering lost data
Not possible to change you mind about settings such as white balance

Whats in a name?

RAW is not an acronym, it means raw as in unprocessed.  It is a file format for storing information captured by the camera's sensor.  Each camera manufacturer has its own way of achieving this, which is why the file suffix is different for each camera.  Nikon uses .NEF, which stands for Nikon Electronic Format.  Canon uses either .CRW or .CR2, which stands for Canon RAW or Canon RAW 2.

JPEG stands for Joint Photographic Expert Group, it is the most common file format for photographs and was designed to transmit images by keeping the file small.  It does this by compressing the information