I use a compass or some circular object to draw whatever size I want. My technique for applique circles is to use water soluable interfacing, draw the circle on that. Stitch to fabric, right sides facing, allowing for a good 1/4 inch outside of stitch line for cutting. Cut out, then slit the interfacing enough to turn the fabric right side out, smooth the curves with a knitting needle or your instrument of choice. You're left with beautifully smooth circles that are easy to applique by hand or machine. Once they finished project is washed the first time, the interfacing dissolves completely, leaving you with no extra bulk or stiffness under the circle.