Mine is on the bottom of the sump and I would put it as deep as reasonably possible. The return section of the sump is where you will see water level fluctuation with evaporation. The level in that section can also fluctuate if you make certain adjustments such as to the skimmer or to the turnover of the overall system. The deeper the better IMO. I think mine is about 16"-17" below the water line in the sump when it's running.
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