i usually fill it up all the way and let it run. once it gets to temp and the thermostat opens the water will go down. leave the cap off during this. then refill as needed. keep doing this until the water stays at the right level. i dont know if this is the "proper way". but its the technique that works good for me.
also you can try removing your thermostat. by doing this your water will just recirculate. with the water recirculating, your gauge should stay at the same spot once warmed up. this will tell you if your gauge is messed up. after the test, reinstall the thermostat. if its old i recommend a new one.