Hold the machine handlebars with an overhand grip.  Raise your shoulders to your ears by contracting the trapezius.  Exhale as you lift the weight, inhale as you lower it.

Machine shrugs allow you the flexibility to select a position most appropriate for your body type.  To determine your preferred position, simply stand upright with hands hanging freely.  Move your shoulders directly up and down.  This will define your range of motion.  Now come up to the grips in that same position.  Place your feet at shoulder level (adjust this to your comfort as well).  The most natural position for most people will be with hands at shoulder width and thumbs almost touching the quads.

In performing machine shrugs keep your back straight and your chest out.  Keep your legs straight without locking your knees out.  Freeze in this positions as you do the exercise only allowing your shoulders to move up and down.  Pace yourself and be deliberate in the motion.  Bring your shoulders as far up as you can to your ears. 

The trapezius muscle goes from behind your neck down the middle of your back.  Machine shrugs primarily target the upper portion of the trapezius.  To stimulate this muscle by way of highest resistance, avoid rotating your shoulders or introducing movement to the front or back.  This may result in injury and is largely ineffective.  There are better exercises for your middle and lower trapezius (such as rows and lateral extensions).

Don't flex your biceps as you lift the weight.  Bending your arms at the elbow, shifts the burden of the exercise to your biceps.  You can avoid the natural tendency to flex your biceps by contracting your triceps as you do machine shrugs.  Don’t lock out your elbow when you keep your arms straight.  Don't push yourself up from your legs.  This shifts the focus to your legs.  Keep you head facing forward.  Don't move your head around.  Traps are especially prone to injury.  If you move your head around and jerk the weight, you could find yourself in the position where you are stretching and flexing the muscle at the same time.  This leads to overstressing and muscle tears - not deadly, but definitely painful.