Here's what you need...
1. Some piping (equal to the perimeter of your quilt plus 4-6"). This is harder to find than you might think. I used to buy micropiping at Joann's for when I make pretty smocked dresses, but was not able to find it. I ordered this from here. It is a perfect size. At 25 cents per yard, how can you go wrong. I have also heard you can use a thicker pearle cotton, though I have not tested this.
2. A cording foot. There are different types of these, but this is what I have and it works well.
Cut the fabric that will cover the micro-cording 1.5" wide, and as long as the piping was cut to. Be sure to piece the sections together with a 45 degree bias cut, or else you will have too much bulk. Then press this in half. The micro-piping will slip neatly into the crease.
Put a matching thread on top and bottom OR a water soluable thread (only if you plan to wash your quilt). Using your cording foot, stitch to the edge of the cording. I usually also secure the top end of the cording before I stitch so it cannot pull out.
After you are done, you will very carefully need to trim the cording by placing your cutting ruler's 0.25" line on top of the seam, and rotary cutting off the excess. This takes a few minutes, but is necessary.
Here's what you'll have a few minutes later. Unfortunately, you cannot start with piping the correct width because this is just too narrow to manupilate with the sewing machine and the cording foot. Susan Cleveland has a nifty piping cutting ruler that actually has a slot for the piping to ride into. But I am cheap, and opted to save my $$ for some other gadget. Everyone is trying to sell us something.
Now, go to your regular sewing foot. Stitch the piping to the quilt's edge (Presumably you have already blocked your quilt at this point). The seam allowance may be set to 1/4" or you can just sew directly on top of the existing seam on the piping. Notice what I do at the corners. As I finish one seam, I back stitch a couple stitches. I then gently pull on the cording. I want to pull out about 1/4" of the cording to relieve the amount of bulk in the binding's corner. Do this on both ends. The next side of piping is started right at the end of the quilt (ie, do not do a folded corner as you'd do with your binding - the cording is stitched in 4 separate pieces). It is a little easier to remove the excess cording before you stitch the piping down.
Next you need to cut your binding however you like. My binding is prepared on bias but either way will work fine. Again, make sure your binding strips are pieced together with 45 degree bias seams to reduce bulk. Listen carefully here. I cut my binding my usual 2-1/4" wide, pressed it in half, etc. Hindsight is 20-20. When I do this piped binding again, I will likely use 2-3/8" instead. Bear in mind that my quilt was quilted with 2 layers of batting, and is thicker than some. But mostly, with the piping, there is more bulk for the binding to have to go around. I did make my binding work with it 2-1/4", but it is a snug binding, and was not always pleasing to stitch it while it wanted to pop open.
So, the last step is pretty much life as usual in terms of sewing on a binding. The only catch is that you have to be slow and careful, and plan to have to have areas that you go back and adjust to make the piping look pretty. Start midway along one side of your quilt. I set my seam to a little wider than 1/4" so that it covers the piping seam. On my machine, 1/4" is a setting of 5.3 and for the binding I used 4.7. It might be at most 1/16" inboard of the seam. It is enough that the threadline on the piping is concealed, and nothing but the tight little bump of the piping is visible. I do not pin my binding because there is enough bulk. I just stitch slowly and carefully. When you reach the corner, do as you usually do to get around the corner when applying continuous binding....
You are now all the way around your quilt, and the binding is sewn down to the top completely. Now take a careful look and see if there are any places that you need to go back and stitch closer to the piping or adjust. I won't lie, I spent nearly 3 hours putting the binding on (not the hand stitching!) this 75" square quilt. It will take some time.
But the finished product will forever change how you do bindings. I promise. The above picture is before the binding is actually stitched to the back side. At this point, check and see how easily your binding is going to wrap the quilt's edge and comer the lines of stitching. If it looks close or that the binding will be very tight, then trim 1/16" or so off of the edge of the quilt, uniformly all the way around all 4 sides. Your binding should be "filled" but not so tight it takes jumbo clamps to hold it down in order to stitch.
Here's my finished binding. I totally love the effect of the piping. For show quilts, this is a very classy edge, and it most definitely will help it to hang more straightly. For any quilt, it is just a lovely way to infuse one more design detail into the finished quilt.
Now, the quilt only needs a sleeve (ahh...150" more hand stitching!) and it is good to go!