How should I watch sensations in Vipassana meditation? How should I watch sensations in Vipassana? Should I watch from head to toe and then toe to head? Please explain things step by step as I'm new to Vipassana. Thanks in advance!
Firstly one should know how to handle experiances. This is what Vipassana teaches you.

Judging or reacting to sensation can lead to negative latent tendencies:


  (1) the latent tendency to lust reinforced by being attached to pleasant feelings;
  
  (2) the latent tendency to aversion reinforced by rejecting painful feelings;
  
  (3) the latent tendency to ignorance reinforced by ignoring neutral feelings.


Pahāna Sutta

So the take away from this is one should not judge or react to sensations.

Whatever feeling on feels one should:


  If he feels a pleasant feeling,
  
  
  he understands that it is impermanent;
  he understands that it is not to be clung to;
  he understands that there is no delight in it.
  
  
  If he feels a painful feeling,
  
  
  he understands that it is impermanent;
  he understands that it is not to be clung to;
  he understands that there is no delight in it.
  
  
  If he feels a neutral feeling,
  
  
  he understands that it is impermanent;
  he understands that it is not to be clung to;
  he understands that there is no delight in it.
  
  
  If he feels a pleasant feeling, he feels it in a detached manner.
  
  If he feels a painful feeling, he feels it in a detached manner.
  
  If he feels a neutral feeling, he feels it in a detached manner.


Dhātu Vibhaṅga Sutta

Similarly,


  “Nothing is worth clinging to”
  
  When this was said, the venerable Mahā Moggallāna said this to the Blessed One: “In what way, bhante, in brief, is a monk freed through the destruction of craving, that is, one who has reached total perfection, the total security from bondage, the total holy life, the total consummation, the highest amongst gods and humans?”
  
  “Here, Moggallāna, the monk has learned that nothing is worth clinging to. And, Moggallāna, a monk has learned that nothing is worth clinging to, thus: he directly knows all things [he directly knows the nature of the all]. Having directly known the nature of all things, he fully understands all things.
  
  Having fully understood all things, he knows whatever feelings there are, whether 
  
  
  pleasant, 
  painful or 
  neither painful nor pleasant.
  
  
  As regards to those feelings, [Section on Disillusionment and Revulsion (Nibbida) follows]
  
  
  he dwells contemplating impermanence in them;
  he dwells contemplating dispassion [fading away of lust] in them;
  he dwells contemplating ending (of suffering) in them;
  he dwells contemplating letting go (of defilements).
  
  
  When he dwells contemplating 
  
  
  impermanence in them, 
  contemplating dispassion in them, 
  contemplating ending in them, 
  contemplating letting go, 
  
  
  he does not cling to anything in the world. Not clinging, he is not agitated; being not agitated, he himself surely attains nirvana.


Pacalā Sutta

Now knowing how sensations should be handled, systematically start scanning areas of your body from head to foot and foot to head without missing any areas for sensations.

There are subtle every ware in one's body. One should make oneself sensitive to the subtlest sensations. One should not miss any areas as this way one may not get sensitive to sensations in these areas. 

One should stay in each and every area for some time until one feels sensations, but not too long as to get attached to the sensation. If one does not feel any sensation after while one just moves to the next area. One should not lose one's mental composure due to the sensations experienced or even the lack of sensations. If there is no sensations one should not feel disappointed as this is aversion.

One should systematically do the scanning so that:


one does not miss any areas
one stays the same time in one area


Being systematic in the scanning process ensures that at some point one is sensitive enough to feel sensations:


thought out the body
instantly when one's attention is moved to the area


When scanning when one feels sensations in an area one should look at them close to see:


intensification and reduction of sensation
components or make up of the sensations


One should look at the sensations:


dividing and dissecting sensations to see more clearly, if the sensations look like clumped up mass of pain or pleasure one should break the sensations into smaller areas to see if they are made of smaller components
one should penetrate a mass or clumped up clusters of sensation looking at how it cages and intensifies as one direction to another
one should look at the change of sensation from moment to moment


Looking at sensations dividingly, dissecting and penetratingly ensures one starts seeing arising and passing away phenomena as a 1st hand experience. Further systematic practice will lead to a situation wherever one's attention is focused one sees the arising and passing away of phenomena.

The sensations one experiences are:


pleasant
unpleasant
neutral


Whatever one feels this is unsatisfactory:


  
  pleasant feeling is pleasant when it persists, painful when it changes;
  painful feeling is painful when it persists, pleasant when it changes;
  neutral feeling is pleasant when there is knowledge of it, painful when there is no knowledge of it.
  


Cūla Vedalla Sutta

Each type of sensation corresponds to the 3 categories of dukkha:


Unpleasant feelings - Dukkha-dukkha, the duḥkha of painful experiences. This includes the physical and mental sufferings of birth, aging, illness, dying; distress from what is not desirable.
Pleasant feelings - Viparinama-dukkha, the duḥkha of pleasant or happy experiences changing to unpleasant when the causes and conditions that produced the pleasant experiences cease.
Neural or neither pleasant not unpleasant feelings - Sankhara-dukkha, the duḥkha of conditioned experience. This includes "a basic unsatisfactoriness pervading all existence, all forms of life, because all forms of life are changing, impermanent and without any inner core or substance." On this level, the term indicates a lack of satisfaction, a sense that things never measure up to our expectations or standards.


In Sammā Diṭṭhi Sutta 16 ways of liberations are discussed and one common thread in many of these ways is to abandon latent tendencies of lust, aversion and ignorance:


  
  he utterly abandons the latent tendency of lust,
  he removes the latent tendency of aversion,
  he abolishes the latent tendency of the view and conceit ‘I am,’
  
  
  and by abandoning ignorance and rousing true knowledge, he makes an end of suffering here and now.
  
  In that way, too, avuso, a noble disciple is one of right view, whose view is straight, attained to wise
  faith in the Dharma, one who has arrived at this true teaching.


In order to achieve that one should use 


pleasant feelings to abandon lust, 
unpleasant feelings to abandon aversion
neutral feelings to abandon ignorance


by being 


equanimous to them and 
seeing their impermanence:



  
  the latent tendency of lust should be abandoned in regard to pleasant feeling;
  the latent tendency of aversion should be abandoned in regard to painful feeling;
  the latent tendency of ignorance should be abandoned in regard to neutral feeling.
  


Pahāna Sutta

When one feels a sensation:


having equanimity one abandons attachment and aversion which intern leads to fabrications
seeing impermanence or arising and passing of 5 aggregates one abandons ignorance


Also, sensations lead to craving


  
  Avijjā,paccayā sankhārā With ignorance as condition, there are volitional
  formations;
  sankhāra,paccayā vinnānam with volitional formations
  as condition, there is consciousness;
  vinnāna,paccayā nāma,rupam with consciousness as condition, there is name-and-form;
  nāma,rupa,paccayā sal’āyatanam with name-and-form as condition, there are the six sense-bases;
  sal’āyatana,paccayā phasso with the six sense-bases as condition, there is contact;
  phassa,paccayā vedanā with contact as condition, there is feeling;
  vedanā,paccayā tanhā with feeling as condition, there is craving;
  tanhā,paccayā upādānam with craving as condition, there is clinging;
  upādāna,paccayā bhavo with clinging as condition, there is existence;
  bhava,paccayā jāti with existence as condition, there is birth;
  jāti,paccayā jarā,maranam with birth as condition, there arise decay and death,
  soka,parideva,dukkha,- sorrow, lamentation, physical pain,
  
  
  domanass’upāyasā sambhavanti mental pain and despair.
  
  evam-etassa kevalassa dukkha-k-
  khandhassa samudayo hoti — Such is the origin of this whole mass of suffering
  


(Paṭicca,samuppada) Vibhanga Sutta

Also, sensation is an important station which leads to concept proliferation.


  “Bhikshu, as regards the source from which proliferation of conception and perception assails a person: if one were to find nothing there to delight in, nothing there to welcome, nothing to cling to—this is the end of
  
  
  the latent tendency of lust,
  the latent tendency of aversion,
  the latent tendency of views,
  the latent tendency of doubt,
  the latent tendency of conceit,
  the latent tendency of desire for existence, and
  the latent tendency of ignorance.
  
  
  This is the ending of the taking up of the rod and the sword, quarrels, disputes, mayhem [strife], slandering and lying —here these evil unwholesome states cease without remainder.”
  
  …
  
  Avuso, dependent on the [eye | ear | nose | tongue | body | mind] and [form | sound | smell | taste | touch | mind-object], [eye | ear | nose | tongue | body | mind]-consciousness arises.
  
  
  The meeting of the three is contact.
  With contact as condition, there is feeling.
  What one feels, one perceives.
  What one perceives, one thinks about.
  What one thinks about, one mentally proliferates.
  
  
  From that as source, proliferation of conception and perception assails a person regarding past, future and present [forms | sounds | smells | tastes | touch | mind-objects] cognizable through the [eye | ear | nose | tongue | body | mind].


Madhu,piṇḍika Sutta

Both these train of events can be stopped by:


knowing there is a sensation
being equanimous whatever is felt
knowing it is impermanent


One should also contemplate causality in Vipassana:


  As such, bhikshus, the instructed noble disciple closely and wisely attends to dependent arising itself, thus:
  
  
  “When this is, that is;
  with the arising of this, that arises.
  When this is not, that is not;
  with the ending of this, that ends.”
  
  
  
  
  
  Bhikshus, dependent on pleasant contact, a pleasant feeling arises. With the ending of the pleasant contact, the pleasant feeling that arose in dependent on that pleasant contact, ceases, is stilled.
  Bhikshus, dependent on painful contact, a painful feeling arises. With the ending of the painful contact, the painful feeling that arose in dependent on that painful contact, ceases, is stilled.
  Bhikshus, dependent on neutral contact, a neutral feeling arises. With the ending of the neutral contact, the neutral feeling that arose in dependent on that neutral contact, ceases, is stilled.
  


Assutava Sutta 2

The arising and passing nature of the sensations result in unsatisfactoriness. Uncontrollable nature results in unsatisfactoriness. What causes sensations are also arising and passing which case the sensations to arise and pass. The cause of sensations is not controllable. Therefore, the whole sphere of experience is unsatisfactory.

Stopping of:


unwholesome roots
latent tendencies
craving
concept proliferation
fabrications
etc. (complete list see: Sammā Diṭṭhi Sutta)


arising is what needs to be done in the course of meditation.