Use Freehand Appliqué Outline 
to draw a line of any shape to create an appliqué outline.
To create an appliqué outline with Freehand Appliqué Outline
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Select the embroidery, then in the Appliqué window
click Freehand Appliqué Outline 
and drag to draw the desired shape.
Create an appliqué outline with Freehand Appliqué Outline
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Select an embroidery.
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Open the Appliqué window
of the Control Panel 
. -
Click Freehand Appliqué Outline
. -
Select a Color Command or Stop Command as a place to start the appliqué piece.
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Drag to draw the outline, and release the mouse button to complete the line.
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Control–click, and in the Context menu choose Finish placing appliqué. The Appliqué Selection dialog opens.
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Select a fabric, then click OK to place the Appliqué Piece.
Note: When hovering over a Color Command you will see the stitching that follows it.
Note: Hold down Command to place a corner point when editing a line.