Use a traditional reservoir stand.
Displaying trees in water in a traditional reservoir type stand is the most effective way of maintaining their freshness and minimizing needle loss problems. 

Make sure the tree has plenty of water.
To display the trees indoors, use a stand with an adequate water holding capacity for the tree. As a general rule, stands should provide 1 quart of water per inch of stem diameter. Devices are available that help maintain a constant water level in the stand.

The stand should fit your tree.
Use a stand that fits your tree. Avoid whittling the sides of the trunk down to fit a stand. The outer layers of wood are the most efficient in taking up water and should not be removed.

Give the tree a fresh cut.
Make a fresh cut to remove about a 1/2-inch thick disk of wood from the base of the trunk before putting the tree in the stand. Make the cut perpendicular to the stem axis. Don't cut the trunk at an angle, or into a v-shape, which makes it far more difficult to hold the tree in the stand and also reduces the amount of water available to the tree. The farm, store, or lot where you purchase your tree might do this for you.

No drilling necessary.
Unless you have a stand that requires drilling, you do not need to drill a hole in the base of the trunk. Drilling a hole in the base of the trunk does not improve water uptake.

Place the tree in water as soon as possible.
Once home, place the tree in water as soon as possible. Most species can go 6 to 8 hours after cutting the trunk and still take up water. Don't bruise the cut surface or get it dirty. If needed, trees can be temporarily stored for several days in a cool location. Place the freshly cut trunk in a bucket that is kept full of water.

Water temperature is not important.
The temperature of the water used to fill the stand is not important and does not affect water uptake.

Check the water level.
Check the stand daily to make sure that the level of water does not go below the base of the tree. With many stands, there can still be water in the stand even though the base of the tree is no longer submerged in water.

Lower the room temperature.
Lowering the room temperature will slow the drying process, resulting in less water consumption each day.

Use lights that produce low heat.
Use of lights that produce low heat, such as miniature lights, will reduce drying of the tree.

Trunk Spliting
Some types of Christmas trees, particularly Fraser firs, may develop a split in the trunk. If your tree happens to have a split or crack in it, don’t worry! Given a fresh cut off the base of the trunk and placed in water, trees with cracks will take up water normally for the entire holiday season.

Cracked trunks are a problem of freshly-harvested trees that are exposed to rapid drying. Full sun, high temperatures, and dry winds can pull moisture from the foliage of cut trees. While drought prior to cutting may be a contributing factor to the stresses that initiate cracks, the primary factor is exposure to conditions that dry the tree out rapidly. Cracks can develop the day after rain if newly cut trees are subjected to sun and wind. Cracks have occurred in cold temperatures accompanied by dry winds, but exposure to bright sun and temperatures above 70 degrees are the conditions most likely to result in split trunks. Cracks will develop during a period of severe exposure whether it occurs in the field, in storage, during transportation, on the retail lot, or someone’s home.

Cracks are not directly related to foliage freshness, a tree’s ability to take up water, or fire safety (these are problems that occur after a tree has lost much of its water content).