Adjust the volume of the drums so that at the loudest point they never clip above 0 decibels (dB). Adjust the volume on the kick drum first, then the snare, hi-hat, toms and cymbals. The kick drum and snare are the two most important parts of the drum track. The drums will be the reference level for the rest of the track.
Raise the level on each instrument you are recording in succession until you hear them clearly. Start with the instruments that you feel are most important. Always listen for them to be balanced first with the drums, then with each other.
Adjust the panning on various instruments so that you place conflicting instruments in slightly different spots in the mix. The panning, in a stereo mix, determines whether the instrument plays predominantly out of the left or right speaker or both evenly. Pan the kick drum and snare center. Pan the bass close to center as well. Find instruments that are playing in the same range and experiment with panning one slightly left and the other slightly right.
Add reverberation effects to tracks you desire to. Snare, guitar, vocals and many other instruments all sound good with moderate amounts of reverb.
Add equalizers (EQ) to each instrument track. An equalizer allows you to cut or boost specific parts of an instrument's frequency spectrum. If multiple instruments occupy the same part of the frequency spectrum, they will cancel each other out and both will sound muddy. Experiment with the EQ on each instrument until you find a range that you think is dominant and boost it slightly. Be sure to boost a different area for each track, and then cut frequencies occupied by other tracks slightly. This creates more space in the mix for all parts to be heard.
Readjust the volumes slightly to perfect the mix.
Leave compression to whoever is mastering your track if you are having it mastered. If you are not getting it mastered, experiment with putting compressors on each track to give each a bit more punch. This will compress the overall dynamic range, making the track sound punchier. You can also add a compressor or limiter to the master, ensuring that your mix is using as close to 0dB as possible without clipping.