Sounds like this may be a serger. The amount of thread that loops over the edge of the fabric on a serger is governed by the thread tension.
When you thread a serger (or sewing machine), Always Raise the Presser Foot first. This releases the tension disk and allows the threads to seat properly in the tension disk. In your case, you may want to remove all the thread from the machine, raise the presser foot, and rethread everything from the beginning. When pulling the thread through the tension disk, give each thread an extra little tug to make sure it is seated all the way in the tension disk.
Usually, start out with the tensions set at the midway point between high & low number and then tweak each from there. If you have difficulty understanding which thread needs adjustment, try a different color thread in each. Then it is easier to determine which thread is a problem. Usually, the higher the number on the tension, the tighter the thread will be. The tension is correct when the threads meet in the middle--there is no puckering of fabric or looping of thread.
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Im no sewer so i cant help you sorry
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