I printed my design out on regular paper (and the BIGGER and simpler the design the better when you starting) and I taped it onto a cutting board. Then, with the shiny side down, I taped a layer of freezer paper over it.
You could trace and then cut but I just used an exacto knife and cut through both the regular paper and the design beneath. You are aiming to have the negative space intact so I cut tiny bits out of the E rather than worry about keeping the E intact.
Then I placed the E with the shiny side down onto the fabric and ironed it on high without the steam setting. I paid extra attention to the edges because I wanted the edges of the E to be crisp. Then I painted my fabric paint on with a foam brush and when I was done I peeled off the freezer paper and left it to dry (no photos of the painting part, I was unnecessarily concerned and got paint on my fingers like the glamorous mess I am).
And then I made myself this knitting project bag. Can I stencil hearts on ALL THE THINGS?