I don't believe there is a "which is the correct hole". It's all about where the saddle is in relation to intonation. If you need to slide it forward and it needs to be in the hole closest to the neck, then put it there, if it needs to be futher back and you have run out of room on your saddle for it to be securly screwed down using the first whole, then use the second hole.

I could be mistaken, but I do believe it's that simple.