
Advance means you make the valve opening event occur earlier in the engines rotation. This also puts the valve closer to the piston at TDC because the valve is opening while the piston is still near the top. Retarding means you delay the valve opening slightly. This gives you an increase in the effective lobe separation which can helps to make a tad of top end power. I wouldn't crank the cam all the way retarded because the valve can open to late which creates some pumping losses inside the engine. They don't have much lift or duration and I doubt it'd do much.
If viewed from above with the wrench on the cam then retarding means you pull the wrench to the passenger side. Advance means you pull it to the drivers side. Put a 22mm ratchet on the crank and pull the spark plugs and turn the motor over by hand in its normal direction, make sure there is no interference. If you put in full advance the valves will contact the pistons. At least on my motor it did. I started with standard timing via the BMW blocks, you can use a stiff straightedge too, and then retarded the cam a few degrees.
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