GAIN CONTROL
The Gain control adjusts the volume of the preamp section. Since the Gain control is similar to a "pad," a small amount of signal will be heard even with the Gain control rotated fully counter-clockwise (with the Master Volume up).
After all EQ settings and the Aural Enhancer are set, the
Gain control should be raised until the preamp clip LED barely flashes when your loudest note is struck. This will insure maximum signal to noise ratio and prevent unwanted clipping of the preamp section. PREAMP CLIP LED
The preamp clip LED will light whenever the preamp, tone section or output buffer reach clipping (run out of headroom). This function does NOT monitor the first tube stage of the Passive input.
In the event the clip indicator lights, turn down the Gain control. Since this circuit monitors the tone controls, boosting any one of them can cause the clip LED to activate. Once again, you may leave the tone control at its desired level, but turn the Gain control down further.
http://www.swrsound.com/support/manu.../b350redom.php
My Ampeg B-100R has pretty much the same thing going on.
It's very beneficial to follow these guidelines.