While we're at it, let me post up this article also.. which i find it useful..
Polish or Clear Coat
Once you have the opaque paint built up to the desired level, you need to decide if you are going to polish the finish as is or put a clear coat over the top. Clear coating is most desirable if you have decals that need to be protected such as on racing cars or cars with graphic exteriors such as police or delivery vehicles.
If you decide to clear coat, keep in mind that if opaque paint hides nothing, then clear paint really hides nothing. For that reason, before you clear coat, the opaque paint underneath needs to be as smooth as possible. The best way to think of clear coat is like a piece of glass. If the glass is over a piece of sandpaper, the gloss will not look as deep as if you place it over a piece of highly polished metal. Light reflection is what show stopping finishes are all about.
Since finish polishing and sanding is the same for clear and opaque paints, lets move on to that subject now.
Polishing Paint
First of all, lets start by saying that finish sanding and polishing paint is a matter of personal preference. If you are building a model for shelf display or a desk, then Tamiya lacquers, straight out of the can, may give you an acceptable finish without polishing. A light coat of wax, to protect the surface, may be all that is needed. Tamiya lacquers attain a very high gloss shine and a smooth finish with the procedures given up to this point. However, there are a number of perfectionists that insist on a finish over and above what comes out of the can. If you seek a competition quality finish, then lacquer can be polished to achieve the ultimate shine.
Polishing paint is an effort to make the surface of the paint as level as possible. "Deep competition paint jobs" come from an even surface, reflecting as much light as possible in a uniform direction without interruption. Polishing paint begins with a fine to very fine polishing stick. Polishing sticks are rigid and do not conform to the surface of the paint. As they pass over an uneven surface, they will contact the high spots only and not touch the low spots. With your first pass, you will see what areas need work because you will see all the high spots as dull areas. It will also highlight any dust or lint that may have gotten in the paint. Careful use of the sanding stick will produce a level surface. Use extreme care when working around sharp edges and raised detail. Lacquer tends to pull back from sharp edges and will be thinnest in these areas. Often when I am doing the initial sanding, I will put a thin piece of masking tape along the edge, masking off about 1/32" to keep me from sanding through the paint at the edge. Any unevenness in that area will not be obvious once the model is done.
After you have the paint leveled out, you need to remove the fine scratches left by the sanding stick. Starting with a 3000-
grit wet/dry sanding cloth, work your way through several
grits of progressively finer sanding cloth until you reach an 8,000 to 12,000
grit. If I am going to clear coat over opaque paint I stop at 8,000
grit. If this is my final opaque or clear coat I will go all the way to 12,000
grit. I use distilled water as a wetting agent for all of my sanding because it does not leave any dissolved mineral behind to be worked into the paint surface. This is helpful if I have to go back and touch up any areas I have sanded through.
Once you have finished with the 12,000
grit the paint should have a nice gloss to it. In many cases this is good enough, but for that ultimate shine, use a soft cloth(I like an old T-shirt) and Tamiya rubbing/polishing
compound. Put a little polishing
compound on the paint and rub it in a circular motion with the cloth using light to moderate pressure, covering a small area at a time. This will take out the ultra fine scratches left by the 12,000
grit. I like to use the Tamiya polish because it appears to have no silicone in it. If I need to touch up the paint for some reason, I do not get excess surface contaminations that may cause fisheyes in the paint like other polishes. After you have finished polishing the surface, a light coat of wax, such as Tamiya modeling wax, gives the finish a very high luster.
If you practice these techniques and improve your eye for finishes, you can take your modeling to a higher level. The key is practice. Try some of these approaches on an old scrap model and adapt them to your preferences. One final thought: When I first started painting for competition, a good friend and painting mentor told me to keep a log every time I painted. In that log I record the paint I used, the temperature and humidity, and any special techniques. I noted what worked and more importantly, what didn't work. I still use that book every time I pick up paint. Develop a system that works for you, and good luck.
-source from scalewiki.com