Advice For Making Iron-On Embroidery Patches?

How do you make embroidery machine appliques for iron on patches? I bought a Singer Futura 150 sewing and embroidery machine and I have successfully created lots of embroidery designs onto items like shirts, towels, etc. But I want to know how to make a design so I can cut it out and use it as a iron on decal.

I'm familiar with the different stabilizers such as water soluble, which dissolves in water, the tear away kind and the stay on thicker kind. And all work well with the designs I put on these items. I know others create there own decals from their machines but I do not understand how it's done. What type fabric is used? What type of stabilizer is used? If using the water dissolving stabilizer does the stabilizer go on top while its embroidering on the design to be washed off later? And how do you cut out the finished design so that it looks professional when applied to other surfaces?

I know after it's finished you put Heat and Bond iron on fusing to the back side. My designs are the ones that get stitched on at once. Meaning that I do not have many that get stitched on first in the color pages style with the outline stitched on first then filled in with the rest of the design. I have found some designs that are like coloring page fill ins but still do not know what type fabric they are to be embroidered onto or how you cut them out to look right.

I want to be able to make my own in my hoops I have for my embroidery machine, then be able to iron them on my clothes like the bottom leg on capris or in the t-shirts center to match. I have already put on a design onto my t-shirts by using my t-shirt and letting the design go straight on. There must be some way to do what I am wondering about. If anyone out there has done their own with their embroidery machines can you please share the how to's on that with me please?

I Googled on it but only got one person explaining it which made no sense to me at all. If you have pics of how to do it step by step that would be just wonderful! Thank you in advance.

Julie from Tenn