Step 3: Set up your hammock
wrap your parachute cord around the tree tightly enough that it wont slip down. how do you wrap it around? however you want, that's whats great about the rope you made. you can wrap it once, twice, tie a ravens head, feed one end of the rope through the loop, any way you can make it work on your tree. just keep in mind that any knot you tie and sleep on will probably not come out very easily. parachute cord is not easy to work backwards with (but you should be able to get away with not tying any knots, just loop it around and put your carabiner in the two end loops).
now take your carabiner and put it through the loops in the cord. put one end of your hammock on the carabiner. repeat for the other tree. your hammock should hang in a gentle curve, you don't want a huge sag as your rope, hammock and trees will bend and stretch as you settle in.
Many people have expressed concern about the rope damaging the trees. Here on the west coast most of the trees I hammock on are huge and tough, and paracord wrapped around them doesnt seem to do any damage. If you live somewhere where your trees aren't as hardy and have thinner bark, you could use flat webbing for climbing or polypropylene truck straps. Just wrap these around the tree a couple of times and hang your rope and hammock from that.