It is quite surprising just how many trees the average model railway can accommodate and what a tremendous difference they can make to the models whole appearance. Good looking trees from the manufacturers are expensive in any quantity but if I was looking to buy then I would turn my attention to the Gaugemasters Sea Foam trees. These are sold usually in a large box for a very reasonable price and with care make up into great trees. However, we are into the DIY thing on this page so lets get started.
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A great asset to most model railways and not too difficult to make, which is fortunate, because commercially made trees of any quality are expensive and you may need a lot of them. There are many kinds of tree but it is not my purpose here to show you how to make a scale model of an oak or elm tree but rather a tree which is recognisable as such and attractive to look at. Once you see how it's done you may improve on the method and be able to produce trees that people recognise straight away, that's great and would be a big bonus. For most of us however just a tree will do fine. It has always surprised me how many trees a model railway can find places for. In a lot of instances they add a much needed height dimension and also help to disguise something that you might not be too happy with. Very useful too for taking roads behind, or even your tracks, as I have seen some very attractive fiddle yard entrances disguised by trees. They are of course beautiful objects in themselves.
There are methods other than the one to be shown here, indeed, you can buy "a forest in a box" from one manufacturer which will do exactly as it says but I am not talking forests here but scratch built trees with which you will be well pleased.
It makes no difference which scale your railway is built to as the following remarks apply to all scales.
We will start off with the trunk and for this you will need lengths of pliable wire. This can be florists wire, available in various thicknesses, electical cable wire stripped of it's plastic sheathing or telephone wire minus plastic. Most peoples garage, shed or spares box are sources of such material. I find that for ease of use single core cables, as in telephone wires are the best for me to use.
Click on image for a larger picture.
You can see in the first photograph that different thicknesses have been used in the examples shown. Both are florists wire as it happens. Depending on the thickness of the wire, thus the ease of twisting and shaping, we may have as many as 50 or 60 lengths or as few as 20. For ease of description I'll take a bundle of the thinner wires, say 20, which are first twisted round each other to the required height before the first branch. Then separate four of the wires and twist those together to make a lateral branch, when that is the required length separate those four into two lots of two and twist each of those together to form two thinner branches of the length needed so we finish up with four single strands for the end 'twigs' which can be snipped off to length. At the end of this excercise we now have a short length of 'tree trunk' with seven branches, counting the last four twigs. To continue, the remaining bundle of 16 wires is then twisted again for more height and then a further 4 wires separated and the same actions as before repeated. Do this 3 more times with the remaing 12 wires and you should have a fair representation of a multi branched tree. The number of wires you can use initially is limited by the ease with which they can be twisted round each other, obviously the more wires, the more branches. You can of course start more wires off further up the tree, as can be seen in the first example shown on the left.I think you will agree however that good looking trees can be produced with surprisingly few branches.
Once your tree has a shape you are satisfied with the next step is to cover the bare wires to give better dimensions and make it look more tree like. There are various materials you can use to do this. There is masking tape, which is wound round the armature in thin strips until a suitable thickness is arrived at and then painted in appropriate colours. A hot glue gun can be used until ditto thickness and shape. Plasticine, modelling clay, all are perfectly adequate for the job. My personal choice, and I think the easiest and quickest with the best results, is to use a thin plaster mix, which I paint on. The plaster can be pre-coloured while in the mixing stage if wanted. The mix can be applied fairly roughly as it can be smoothed down and shaped after application. Be aware that most of your efforts in this direction are going to be covered by foliage, unless you are modelling a winter scene or a dead tree. 
In this picture plaster mix has been added to the first two shapes and in the third the mix has been shaped and coloured.
Click on image for a larger picture.
Next we have three examples showing the process from start to finish. On the left you can clearly see the twisted wires forming the shape of the tree. In the centre is another tree shape also made of twisted wires but much thinner ones and with some mix added, this particular example will have more gunge added before being painted in it's final colours. Then on the right we have a completed tree. The foliag in this case is teased out Swedish lichen stuck to the branches with UHU glue and then covered in scatter material of different hues of green. 
I use many different materials as well as the lichen, for example teased out pieces of green kitchen pan scrubber, ditto rubberised horse hair, cheap plastic leaves cut off ghastly plastic flowers and anything else which will lend itself to the process. One of the main things to bear in mind here is that whatever material you use as a base for the scatter material it's outline must be irregular, there are no straight lines on trees.
If you want lighter foliaged trees, which are as natural as any I have ever seen, then use postiche. This is available from model shops and is a theatrical human hair product, or so I believe. When you buy it in small hanks there doesn't look much but you only have to tear off a very small piece and then tease it out to make a much larger, airier piece. You then spray this with a spray glue, I have often used very cheap ladies hair spray, then dip the piece of sticky postiche into a box of scatter material, shake the surplus off then drape the section onto one of the branches of your tree armature. Keep repeating this process until you have the desired result. If you are going to use this material then it will pay you a hundred fold to spend a lot more time on the production of your tree shape and the application of the plaster, or whatever you use to bulk the trunk up, and then the final colouring. This care and attention will provide you with a magnificent specimen of a totally natural looking tree.