First, import your image into your document. (How To)
Please note: When nothing is selected, the Contextual Toolbar beneath the will show the Page Options, such as document size and general settings.
When you select the image, the Contextual Toolbar will change to show the image settings, including and most importantly Vectorize. Please click Vectorize.
This will bring you to a window to select the amount of colors you need and/or want in your cut file. Once the image on the right looks how you want it click the "1. Trace" option.
Pressing "1. Trace" will create your cut path for the object. If you like the outcome click the "2. Accept" button. Otherwise, change the settings and run the Trace again.
Please note: Whenever you make any change to the Vectorizer Settings, you will need to process the Trace again by pressing the "1. Trace" button or it will import the last trace that you processed.
Please note: Low Image Resolution can affect your resulting cut file. (Example: The Blade Holder Design above loses the topmost line.)
You should now have a vectorized design ready to be sent to your cutter! To easily tell that the design is vectorized, you should no longer be able to see the vectorize button in the Contextual Toolbar.