Preparation is the key to any paint or wax job on a car. One of the best steps to take is to compound the finish. Compounding gets all the dirt, grime, tar and other residue off of the underlying paint so you are left with a super clean surface for the new finish you are about to apply.
Wash the car. A good washing will get rid of all the lose dirt and dust so that when you're compounding, you're concentrating on only the material that is really hard to get off.
Apply rubbing compound. The compound is a paste integrated with fine granules that scrub the surface. There are a wide variety of buffing pads suitable for applying it. A foam pad is probably best, and there are pads made to fit on a drill so you can buff with less strain on your body.
Apply evenly. A circular motion is best. Keep moving across the surface, and don't apply in one spot too long. The granules are capable of grinding your finish down to the primer and metal.
Rinse lightly. Wash off the leftover residue from the compound after your done and then dry off the car. Buff the finish with a dry cloth or sheep's wool pad. Your car has been compounded and is ready for waxing or a new coat of paint.
Buy several buffing pads. The pads get gummed up after a while, so you need to have fresh ones ready.
Don't buff in one place too long, it can wear down the finish too much.