The background provided previously in Google’s history will help you grasp the concept of link juice. As Google scores your links and your content, it is essentially giving your website a certain level of authority. This authority is largely measured by your PageRank,2 which uses a scale of one to ten (in whole numbers). As your website gains authority, your PageRank increases.
As your PageRank increases, it becomes increasingly important to protect it. One way you can drain the link authority (link juice) of your website is to link from your website to another website that is not relevant to yours. If your outbound links are excessive or not linking to relevant content, the result is draining authority from your website. This is known as draining link juice. The opposite occurs when link juice is passed along to your website from a high PageRank website with relevant content. The most common resolution to prevent draining link juice is to place a piece of code on your links which tell the search engines “not to follow the link,” and therefore you don’t drain any link juice from your website. This is known as a no-follow tag.
The point to understand is that you can prevent leaking valuable link juice from your website by using no-follow tags in your outbound links. However, you should know that the recipient of your link will not receive any SEO value from your link. Adding a no-follow tag is pure to tell search engines not to credit this link for SEO value. It has no effect on the visitor’s ability to click the link to the destination website. In other words, it’s strictly behind the scenes and transparent to your website visitors.