Hold baby cradled in arm.
Hold sling by shoulder pad, with rings facing forward and tail hanging down in opposite arm.
Pull sling over your head and arm cradling baby until shoulder pad rests on opposite shoulder.
Find the bottom rail of the sling and pull the fabric along baby's body.  Keep sliding the fabric along baby's body so that it won't all be bunched up around baby's head.
Pull the rail (edge) of the sling completely under baby's bottom. Keep pulling the fabric along baby's body so that it's evenly spread.  Make sure that the fabric goes around both sides of baby's body so that there is fabric between your stomach and baby's bottom.

For smaller baby's, feet should be inside the sling. For larger baby's, feet can hang out the end of the sling, but the sling must cover baby's bottom and back of knees so that baby's weight is supported.
Tighten the edge of the sling that is supporting baby's bottom by pulling on the fold of fabric in the tail that is closest to the outside of your shoulder. 

Keep tightening until all of the slack is out of the bottom rail.
Now that baby's bottom is safely supported in the sling, use the arm that was tightening the sling to support baby's head outside of the sling.
While baby's head is supported outside of the sling, remove your elbow and arm from the sling and cradle baby's head outside of the sling.
Tighten the top rail/edge of the sling by pulling on the fold of fabric that is closest to your chest.  Keep pulling until baby's head is supported.
It's best to position baby's head on the padded rail of the sling.

If baby wants to see out, you can pull the fabric down and just use the sling to support baby's bottom while using your arm to support baby's head.

If baby is small and getting lost in the fabric, make sure the fabric is not all bunched up at the head.  Pull the fabric along baby's body to get it away from her head.

Also, you can fold in the top padded rail to reduce the fabric around her head.
CRADLE POSITION