The HTML attribute "rel=nofollow" provides a way for webmasters to tell search engines not to follow a specific link. This way users will be able to visit the link but search engines will not take it into account when ranking the website.
You might think that the main purpose of building links is to tell the search engins that your website is very important in your area of interest. But no follow links are important to both who are providing the link and buying the link (Though buying just the link for money is not recommended).
You should use nofollow in your links:
- When you link to untrusted sources.
- When you want to limit the weight you give to the specific link's destination.
- When you link to inside pages such as login, register, request a new password, legal disclosures, etc. The idea is to give more weight to the more important internal links that have unique content.
- In the comments/forum where visitors can post on your website. Since nofollow links have no weight for search engines, they provide a strong barrier against spammers posting in your forum or comments.
- If your website has too much outbound linkjuice without relevant content search engines might think that you are selling links and reduce the value given to your outbound links so it is good to use no follow links to links that add no value to your site.