Yea, you are supposed to cut the wire loop somewhere. One end will go to the battery via another cable or directly. The other end goes to the amp.
The head unit should have a wire called "Remote" which is blue with a white stripe. That connects to the remote connection on the amp. When the head unit is on, there is +12V on the wire and the amp turns on. When the head unit is off, there is no voltage and the amp turns off.