It's not just about setting the correct pressure and reading your altimeter...

1) Indicated Altitude

Let's start with the easiest altitude first. Indicated altitude is simply the altitude you read directly off your altimeter.

2) Pressure Altitude

When you set your altimeter to 29.92, you're flying at standard pressure altitude. This is the altitude of the aircraft above the standard datum plane, the theoretical location where at 15 degrees Celsius the altimeter setting will equal 29.92 inches of mercury. Many of the calculations you'll find in your POH require knowledge of what pressure altitude you'll be flying at.

All aircraft flying above 18,000 feet MSL are required to set their altimeters to 29.92 inches Hg (in the US). This means that all aircraft flying in the flight levels will have the same altimeter setting.

3) Density Altitude

Density altitude is pressure altitude corrected for non-standard temperature.

When it's hot outside, your airplane doesn't perform as well. Your takeoff distance is longer, and you don't climb as fast. That's because when it's hot, density altitude increases, and your airplane "feels" like it's flying at a higher altitude.

Less air mass flowing over your wings prevents you from generating as much lift, and less oxygen mass in your cylinders prevents you from burning as much fuel, meaning less power. Decreasing air density decreases performance, so be careful on hot days at high altitudes.

4) True Altitude

True altitude is the vertical distance of your airplane above sea level. Commonly expressed as "feet MSL" (feet above mean sea level), many of the airspace altitudes, terrain figures, airways, and obstacles you'll find on aeronautical charts are expressed in true altitude (MSL), feet above sea level.

5) Absolute Altitude

Constantly changing, absolute altitude is the distance measurement of your airplane above the ground. Expressed in "feet AGL" (above ground level), you can also find many obstacles and airspace classifications that exist in feet above the ground.

A radar altimeter (or radio altimeter) measures altitude above the terrain presently beneath an aircraft by timing how long it takes a beam of radio waves to reflect from the ground and return to the plane. Radar altimeters generally give readings up to 2,500 feet AGL.