Polishes can take out swirls and light scratches. Compounds are more aggressive and can do more damage if not used correctly. Normally a compound has to be followed by a polish.
There are plenty of polishes out there, and everyone has their preference. Some Require more time to break down, some don't respond well to certain weather condition, and some dry out really fast when you're working. 3M or Meguiars professional series are two good products to start off with since they are relatively cheap.
What I use is a random orbital buffer, with a good variety of lake country pads, lots of microfiber towels, and menzerna polishes.
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