Link: http://adteputek.com/b2evolution/blog2.php/2009/06/16/what-is-the-correct-way-to-apply-teflonr

Teflon® PTFE tape is only approved as a thread seal when applied correctly. To apply you begin at the end of the pipe and wrap the tape under tension in the direction of the thread turns. Each successive layer should overlap the previous layer by ½ to 2/3 and continue wrapping until the entire threaded portion of the pipe is covered. (Minimum of 3 full turns).