Normal procedure is to set the front aperture for the amount of white that you want to see around the aiming black of the target you are shooting at.
This is a personal thing, as some folks like a large amount of white around the aiming black and some like a smaller amount.
To begin somewhere lets say you look through the sights and determine that with the front aperture set at 3.5 it looks about right with the amount of white showing around the black to you.
Now move to the rear sight and close the aperture down to where the target looks too dark to see.
Gradually open up the aperture to the point that the light "shines through" and the target is nice and black.
Make sure you have the rear aperture as close to your eye as possible without getting hit during recoil. This helps you by allowing a smaller opening in the rear aperture since it is closer to your eye.
You may have to play with the settings depending on light conditions but that should give you a starting point.
Written by Tony Miller and posted on the Long Range Target Shooting forum