I always trace my patterns onto Lite Heat & Bond, in all the applique I have done, I've never had any problems with fraying. Depends on the look I want on pcs, I usually do the Blind Hem stitch, some I do a small zig zag stitch. If it's a real difficult pc, I will do a stitch I have on my machine that does, well it's hard to 'splain - it takes 2-3 stitches forward, then one back, and so on. You stitch about an 1/8" from the edge - it's a tight stitch and I've never had any problems with the applique coming loose. The Heat & Bond keeps it stuck tight. I've done applique for many years and have never had any problems. Hope this helps answer some questions.
Happy New Year ya'all
Jean