Higher density foam cutting pads are often orange, and these should be used with your initial stage of compounding as they give the heaviest cut. Then you can follow this up with a softer foam cutting pad, which are normally black. If you've got a dual stage compounding system, then you would use the finer cutting compound with the softer pad. Normally I apply a bit of compound to the pad, and a bit of compound onto the surface of whatever you are polishing. Then start compounding with the edge of the pad, and work the whole surface before doing it again with the pad flat. Be sure to keep enough compound on the pad/surface to keep everything lubricated. Do the same with each pad/compound stage. After each step, wipe off any residue with a clean cloth to avoid contaminating the next stage and ending up with swirls. After your final compounding stage, give the part another quick polish by hand with a clean cloth.
The eBay link you posted is spot on, though the green pad would be pretty unnecessary as the orange is heavy enough for gelcoats. The hexagons cut into the foam also give them an even heavier cut as well, so be wary of going through your gelcoat on corners and thin areas. The ones in that link are pretty well priced if they are decent quality.
One of the most important things to watch out for when polishing is that everything is clean. Wash your pads after every use, and always have a specific pad for a specific stage, don't contaminate your pads with heavier/finer compounds. Look out for bits of dirt while you are polishing.