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Cut the posts to the desired height with a circular saw. Remember to figure in the thickness of the cap into the height of the fence. For instance, if the height measure 5 feet, subtract an inch and cut posts to 4 feet, 11 inches.
Measure the height on the two outside posts and stretch a chalk line from these points across the others to get a line on each post. Be sure to stay level.
Set the depth on a circular saw to be half the width of a post. Score along half of the top of the post above the chalk line with the circular saw so that the cuts resemble shutters. Go back with a chisel and hammer and chip away at the scored wood pieces.
Now start attaching the 1x6 boards for rails. The top rail height should be one inch above the height of the posts, accounting for the one inch thickness of the cap. Use a level to make sure the rails are straight, then use the finish nailer and 2-inch nails to attach. Attach rails to the front and back for a double-sided fence.
Once the rails are in place, add the fence boards. Keep them about 3/4-inch off the ground so they don't attract moisture and rot, and be sure they are level with the posts on top. Nail them in with the framing nailer about 3/16 to 1/4-inch apart. You may need to use a table saw to cut down a board to fit the last space.
Once all the boards are attached add the cap. Cut a cedar 1x6 to length and nail it down to both the posts and top rail.