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How to stitch an appliqué design with an embroidery machine
After the first color has stitched, remove the stabilizer from the hoop and trim both layers to about 1/8 inch or 3 mm outside the line of fabric. Peel away the stabilizer on the back.
Hoop the fashion fabric onto which you want to apply the design. In this case it is a flower. I used the same tear away/ rinse away stabilizer and hooped the fabric,but it is also possible to hoop only the stabilizer and use adhesive on both layers of fabric to hold them in place. If you do that, it is smart to use a basting pattern to hold the fashion fabric in place in the hoop.
At the embroidery machine, go back to the first part of the design again. Stitch the design from the beginning again, so the the single line of stitches you just stitched for the cutout will be on the fashion fabric where you want the flower. This will guide you when you lay the appliqué cutout (lightly sprayed with adhesive) onto the hooped fabric. Now run the second color. In this case, it is a line that doubles back on itself and another round of zig-zag stitches that hold down the fuzzy edges. Many fabrics will need a layer of light water soluble stabilizer to hold down the fuzz, but this cotton/poly blend worked fine without that. Fabric choice is very important with appliqué work. You can get really interesting results with exotic fabrics, but some are very troublesome to stitch and don't wear well. Begin with a tightly woven light cotton or cotton blend. If you wan to try velvet or ultra-suede after you gain confidence, remember to lay down a layer of water soluble stabilizer on top of the appliqué from the moment when the first line section of the design stitches the applied fabric into place. Be very careful to use a light amount of adhesive, but do use an adhesive. If you don't, the fabric will usually bubble up a little and just won't be perfectly neat, and sometimes it will come away when it is laundered.
The rest of the process is the same for both techniques, and for any other embroidery design. Just stitch the rest of the colors.