Originally Posted by peregrines
The theory is that the current speed affects the length of line you'll need to reach bottom since the line with the fly and split shot doesn't go down in a straight line to the bottom from the indicator, but descends at an angle--
So if the water is 2 feet deep and moving, if you set your indicator 2 feet above the fly it might end up being only 1 foot or so below the surface. If on the other hand you set it 1.5x the depth, or 3 feet in this case, it will be closer to the bottom. 1.5x seems about the right ratio for many situations, but use less for slower currents, more for faster currents.
Again that's just the theory---
Hope this helps
Mark nailed it. It depends on the depth and speed of the water you're fishing. I fish a very slow-water spring creek where I set my indicator fly exactly the depth above where I know the fish are holding - sometimes its the top of the weeds, sometimes lower. When I fish the lower Henry's Fork, especially around the Vernon Bridge stretch I usually use 1 1/2 to 2x from indicator to my first fly and then adjust accordingly.
Constant paying attention is needed since many areas have different depths for different runs, thus the reason why I use Thingamabobbers for any river nymph fishing besides on my spring creek, they are adjustable and you need to remember to make an adjustment from when you're throwing in the deep, heavy currents, to when you may turn around and start throwing towards the bank where it may be much shallower.
The biggest solution to this is to pay attention to what is happening with your drift - if you're hanging up on rocks and weeds every cast, you may be too far up the leader with your indicator; not hanging up at all, and not catching any fish, perhaps you're too low with your indicator. Pay attention to what' is or isn't happening and make adjustments accordingly.
Also, don't forget to give attention to how much weight you may or may not need to get your flies to the correct depth as quickly as possible.