From Helen South,
Your Guide to Drawing / Sketching.
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The first step to successful pencil shading is to control the movement of your pencil, making sure that every mark you make on the paper works towards creating the shading or modeling effect that you want. The following pages offer a few tips to get you started. To begin with, decide whether you want to use the point or side of the pencil to shade with.

The example at left is shaded with the point, at right, with the side. The difference doesn't show up clearly in the scan, but you can see that the side shading has a grainier, softer look and covers a large area quickly (a chisel-point pencil will also give this effect). Using a sharp point to shade allows you more control, you can do much finer work, and get a greater range of tone out of the pencil.

Experiment with both to see how they look on your paper. Try it with hard and soft pencils, too.