That’s sort of the point of “good” compression, you’re not supposed to hear it.
You and Nick V have the basics down, but I want to point out an important aspect. First off, I listen. Once you get accustomed enough to mixing you get a grasp (a feel) for how you want to apply compression when needed. There’s no real proper formula to compression as the “why” and “how” change with every application.
That being said, there’s obviously some methodology to it, which you sort of figure out for yourself. I personally start with the attack and release before even engaging the compressor. I do this because if I turn it on, roll down the threshold and the attack/release are in wonky pre-settings or set to the absolute fastest time, it’s going to sound unnatural right off the bat, which is like starting with a messy canvas (IMO).
So I set the attack/release in a neutral area (usually somewhere between 2 and 4 o’clock, 5 being fastest time), turn on the compressor and slowly roll down the threshold. At this point I can hear the compressor working, and I’ll set the threshold a a little lower than I’m planning on using. By now I probably hear what I like/don’t like, and will adjust the attack and release accordingly.
Attack/Release settings require the most thought. Going back to my first point, based on what you heard and what you’re looking to achieve you only need to translate that interest into the right settings. General examples would be:
- Transients are out of control: Fast attack/Fast Release
- Resonance/Energy needs taming (vocals for instance): Slower attack/Fast-ish Release
- Needs more punch: Fast-ish attack(letting first transients through)/Medium Release
(Again just very crude general examples, don’t use these as guides)
Once I have the settings close to what I want I roll the threshold back up to a more reasonable point. As a rule of thumb I try to never start compressing over 4dB’s gain reduction. Then I perform another crucial step: listening again. Dial in the make-up to where the level is the same as pre-compression and turn the compressor on/off (bypass). Usually I can clearly hear what changes I’ve made and then I just ask myself: “Is this what I wanted?” No, keep making adjustments, Yes, done. When I work like this I generally just fine-tune a little and end up rolling back the threshold more usually. If you really check to hear what’s going on you’d be amazed by how much a compressor is doing, even when used slightly. Which is why you always see rookies compress the hell out everything.
Obviously you can use a compressor as an effect as well, but that’s completely different. Usually you’re trying to overdrive the circuits which distorts the track and can add drastic pumping/ducking depending on attack/release settings. (Though you’ll get that either way if you’re using improper settings).
All in all, compression is tricky, as you really need to focus and train your eyes to understand what’s happening. But as you keep doing it you’ll get a feel for it. Just remember to always listen and reference check, 'cause that’s really the only way to learn and retain your experience.