Well, KOPS (knee over pedal spindle) is a starting point and not necessarily the best position for everyone, but you would measure it by putting your cranks arms level while you're on the bike and hanging a weight on a string from the inside of your knee cap (on the forward leg) to the pedal. KOPS would want your saddle to be in a position where the line goes right through the pedal spindle.
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It's like riding a bicycle