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|Tragedy is when I cut my finger. Comedy is when you fall into an open sewer and die. (Mel Brooks)|
Probably the main thing to understand about effects order is that an effect modifies the sound it receives. This means if you plug your guitar into a fuzz box, the fuzz box gives you a fuzzy guitar sound - pretty obvious, huh? If you then plug the fuzz output into a wah pedal input, then the wah works on the fuzz sound, giving you a synth-like wah sound.
If you plug first into the wah, then into the fuzz, it gives a completely different sound. That's because the fuzz is working on a guitar sound that already has a wah effect. You may know that distortion effects like fuzz have more effect on loud sounds than quiet ones (that's why they sound cleaner when you roll off the guitar volume).   And a wah pedal makes different notes and frequencies louder and softer as you rock the pedal, so rocking the pedal also now controls the amount of fuzz as well, giving what most players prefer as a more interesting effect.
There are no rules on effects order. You won't break any pedals by putting them in a 'wrong' order. In fact, experimenting is the best way to learn, and in doing so, you can come up with many unusual and interesting sounds. There is, however, a typical order of effects that I've listed below.
Before we get into the order, though, you might like to consider why, when & how you use effects. My most deep piece of wisdom to pass on is that the subtle use of effects is suitable for long periods of use, while intense effects have most impact when used briefly.
For example, light phasing or chorus can be used for an entire song, adding some texture to backing rhythm. Dramatic effects like strong delay, wah, or even playing techniques such as continuous fast picking without a rest, become tiresome when overused.
I think the most special effects are those that you can only just detect are turned on. In the late 70's, I had many people trying to figure out how I got a such a special overdrive sound for my solos. All I did was to use a faulty (weak-sounding) phaser set to a slow speed before the overdrive, to give just a hint of movement. You can use understated effects easily to craft your own signature sounds.
A good starting order, from guitar to amplifier, is:
These effects sweep a peak (wah) or notches (phaser) in the frequency response. By placing these before distortion effects, they vary the distortion intensity of the affected frequencies at the same time.
The original Vox and Cry-Baby wah pedals did not use a true bypass when off, and can load your guitar signal. If this is a problem for you, you might want to have the switch replaced with a true bypass.
Another way around the problem is to use a "buffer preamp" before the wah, which can be any effect with electronic switching, turned off. If you use a phaser as well, plug that in first, and it will happily drive the wah pedal.
Even though many players suggest compression should be first, there is benefit in placing it after filter effects. Filter effects can reduce volume at some settings (eg heel down on the wah pedal, notches in the middle frequencies from a phaser, etc), so placing a compressor after these effects can even out volume changes.
Overdrive & Distortion
Stomp-box overdrive effects, or your pre-amplifier drive channels placed after the filters gives them a more natural sound, like placing your wah pedal before a heavily overdriven amplifier. Using the filter effects after overdrive gives them a much stronger, more synth-like sound. You would not normally need to use heavy compression and heavy overdrive together.
There can be merit in using light EQ before the overdrives (used only when the overdrive is on); this gives you the ability to change the character of overdrive. For example, boosting the highs before overdrive, but cutting highs after overdrive (with the overdrive's tone control), will balance the highs overall, but cause them to be more heavily overdriven than the lower strings.
The overdrive could be the preamplifier in you amp. You can use this if your amplifier has an effects send and return, to allow you to use the remaining effects below. You may need to check the levels sent and expected by the send/return loop; often they are designed for line level only (eg rack equipment) and not the lower level stomp boxes.
Some send/return loops allow you to blend the return in an equal mix with the unaffected signal. This is great for not affecting your original signal, which can become quite unnatural if taken from the amp, processed by one or more analogue-to-digital-to-analogue conversions, then re-input. This increases the complexity though, when you want to remix chorus, flange, delay and reverb, all without any original component. Also, you may want some of these effects to be fed with inputs of a mix of original and other effects. These capabilities are often not provided in rack products.
Graphic or Parametric EQ and Speaker Simulators can be used on their own, to tailor solo or rhythm sounds, or after overdrives to give more control than you usually have with the overdrive tone control. For example, you could use heavy distortion, and use equalisation here to cut middle for a heavy sound, or tailor the highs for a creamy, yet "bitey" Santana sound, etc. EQ can also be used before overdrive effects to control the character of the overdrive. It's common to reduce bass before an overdrive to reduce "flabbiness" on lower strings.
Before using a volume pedal to control my on-stage volume, I used a graphic equaliser stompbox to set a nice rhythm tone, with reduced level. I set my amp for the lead sound I wanted, and (although it sounds strange) turn the equaliser OFF to play a solo.
Speaker simulators are mostly preset, and highly tailored equalisers to emulate speaker box resonances, and microphone techniques. Some include other subtle effects, such as short delays, as well. Placement is not as crucial as you might think. For example, most recorded sounds use a microphone in front of a speaker box, then studio effects, such as equalisation, chorus, delay, etc applied afterwards.
On the other hand, when you play live, and are using a variety of effects through a stage power amp and speaker box, you might want to use the simulator here only for the purpose of feeding the mixing desk (who apply their own delay and reverb for the front mix). You could bypass the simulator on stage, and apply just enough delay/reverb to give a natural on-stage sound.
These effects include Harmonisers, Vibrato, Pitch benders and octave dividers. Harmonisers in particular should be placed after overdrive. In the opposite order, sending several notes to the overdrive input causes strong inter-modulation distortion where additional, usually low, notes are added. These extra notes may have no relationship to the harmony you intend. Because the quality of most pitch effects is often quite poor, anything that changes pitch without including the original is best placed before overdrive which can help mask the change in pitch affected tone.
Flangers and Chorus are effectively combined filter, delay and pitch effects. Because each of these effects is subtle (unless you set high resonance), many players prefer them after distortion, and prior to echo effects.
Placing level effects such as noise gates, limiters, volume pedals, tremolo and panning before echo effects allows a natural echo sound. For example if you play a loud chord, but fade it out quickly with a volume pedal, you still want to hear the echo on what you played. The other way round, with echo first then a volume pedal, you would hear a loud chord with echo briefly, with both the main sound and the echo quickly cut out to silence. This sounds about as natural as turning the power off on your amp!
Delay and reverb are usually placed last to allow you to emulate the effect of using an amplifier in a "lively" room.