I wrote out my whole process about a week ago... So I guess a copy paste is in order. But I hate a straight copy/paste so I'll write some new stuff in there.
Before the paste, I will say that adding instruments one at a time might not be the best idea. I see a lot of people saying they start with drums, move to bass, move to guitar, etc. A typical (whatever that is) song puts huge importance on drums. Probably second to only vocal. Doesn't make sense to me to mix something as important as drums without any context from the rest of the song already present.
And this is a topic for another day, but if you are mixing your own stuff you have to learn the difference between a mix problem and a tracking problem. 90% of mix questions (and mastering questions) I see on this board are really tracking problems. If it doesn't sound damn near ready for the radio before you do a single bit of mixing...That's a tracking problem.
Anyway, onto the (augmented) paste:
How I mix:
Zero the board. Meaning put all faders at the same level somewhere in the middle, take out all eq and all effects. Pan everything center. Just listen for a bit. Everything is playing. Nothing is altered.
I like a "starting point" so I don't end up running out of head room. I'm usually safe if I solo the unaltered bass drum, move it to where the master buss hits -14, and then pretty much leave the bass drum fader there and move the other faders around it. But we're not moving of those other faders yet until we turn the rest of the tracks back on. So turn everything back on. Nothing has moved yet aside from the bass drum fader.
On a side note, if you do run out of headroom down the road, don't just pull down the master fader. Most likely you are cliping imediately after summing, and then the master fader pulls down the already clipped sum. Pull down your individual tracks instead.
But back to the mix: Turn the monitor volume low (this is personal preference). Start moving faders up and down. Get your track balance correct. For anything tracked with multiple mics (drums for instance), start flipping phase back and forth on tracks to make sure everything is "in".
Listen for anything that could use some EQ. Until you get some real experiance under your belt, don't try to "improve" a track that already sounds good. Just hunt out the stuff that clearly needs help.
Shoot, even after you have a ton of experience under your belt you probably don't want to mess with any track that already sounds good. But by then, your experience will tell you if that "messing" is a good idea or not.
If you are confident with compressors, start thinking about them. Again, listen for things that need help instead of trying to improve good tracks. Learn the difference between something that needs EQ and something that needs compression. Something that needs a fast attack compressor can sound an awful lot like something that needs added low mids. Learn how the release time of your compressor can "eq" the sound. Often, quicker releases sound "brighter". Depends on what you got. Play around with extreme compressor settings on a mix you don't intend to use to get a feel for the sound.
The most important button/checkbox in your EQ/Compressor section is "on/off" or bypass or however your system lables it. As you make EQ or compressor adjustments, constantly do A/B comparisons with the bypass. Sometimes I spend 10 minutes EQing an instrument, think I nailed it, and then hit the bypass to find I actually made it sound worse. Most EQs and dynamics have makeup gain. Set this correctly so you do not have any volume change when hitting the bypass. It makes the "did I make this better or worse" judgement much easier.
Anyway, move some faders. Change some eq. Move some faders. Change some EQ. Every now and then bring the volume up loud. See if that exposes a problem that you didn't notice down low. This is also a good time (after hearing the whole mix for a significant time period) to solo the kick drum and snare to see what you've got there. Don't make any tone changes solo. Just...learn what's there. Then go back to full mix. Pull the volume low again. Move levels, EQ. Etc. When you're happy and it's time to bring it all back up loud again, maybe this time you really crank it up and leave the room. Or walk clear across the house/building 3 rooms away. This always uncovers fun surprises in the mix. You will find mix problems you didn't hear before.
Go back. Lower the volume. Adjust. Raise volume. Repeat.
In the middle of all of this, you will find that you need to mute tracks every now and then to concentrate on something else. This is important: Be sure that you remember the sound of what you muted while you make adjustments. Mute as few tracks as possible to hear what you need to hear. Give it all a listen after unmuting before finishing your adjustments.
As an alternative to muting a track or two, if you have enough headroom you can just crank up the volume of the single track you are trying to hear. When you lower the volume of this track to put it back in the mix, don't assume that it goes back to the same place. In fact, listen to everything else as well. The tone changes you made might mean that some other track has to go up or down.
Once you are happy with all THAT, then maybe you start moving your pan knobs around. Be aware that after something pans, you might have to adjust the level to compensate. How do you know when you have to make a volume compensation after a pan?
This is just my brain, but I literally see the mix as a solid three dimensional object sitting on the desk right in front of me. I don't try to imagine it as some visual metaphor or anything. That is just how it appears to me, and I couldn't perceive a mix any other way if I tried. Anyway, that is how I know where to pan a sound and how loud it should be. If the "mix object" sitting in front of me has an obvious gap 1 foot back, 14 inches to the left, and 8 inches off the ground, well then I'm going to put an instrument there!
Your brain's millage may vary, but the point is to learn how you personally perceive a mix and use that to your advantage so you can build a mix that you know to be correct. I learned by years of listening to my favorite professional mixes. The listening doesn't count if you are driving or cooking or doing homework. Nothing but you and the music. Then you will know how you perceive a mix, and thus how to build a mix.
Anyway, when you are doing this panning and your sound field is coming together you can start thinking about digital effects. Think "short delay" for things that are wrapped in a bubble and don't seem to want to join the rest of the instruments. Think reverb for things that are too "close". Just as we did with the eq, don't look to improve any track that already sounds good. We are just adding effects to things that need help.
Then it's back to low volume/level tweaks/eq tweaks. Back to high volume. Repeat etc etc. Your wife is wondering if you're still alive by now and you are wondering what the heck there could possibly be left to learn about these tracks, but you're not done until you feel it. You will know when you're done.
If the CD sounds good in your car, think of that as confirmation that you are done.
And remember, you have to do this independently for parts of the song that sound different. But don't mix one section entirely before even starting on the other. Bring it all up together. And mix automation/saved mix scenes are your best freind when moving from section to section.