Cast on (144/156) stitches with an invisible cast on using the main colour. Don't know how to cast on invisibly? -- here's my favourite method!

Invisible Cast On Using a Crochet Hook -- using a nice silky cotton yarn, use a crochet hook (2 sizes larger than your needle size) to make a chain the number of stitches you require + 8-10 chains!

Look at your crochet chain and you'll see that it has two sides -- the one that looks like the V of stocking stitch. and on the back the purl bump side! Look at your chain and knit into the purl bumps -- knitting on your 144/156 stitches -- leaving a couple of chains at the start, and at the end of your knitting.

Hold your circular needle in its circle -- ensuring that your stitches and the crochet chain are not twisted -- with the crochet chain on the inside of the circle leaving the stitches around the needle.

Joining your stitches together to knit in the round, knit a few (at least 6) rounds using your background colour to establish your knitting, and get your tension on gauge. Mark the start of your round with a pin, a loop of yarn, or knitting marker of your choice!

Join in your contrasting colour, and proceed to knit Chart 1. Start from the bottom, and read each row of the chart from right to left. Each pattern should repeat evenly on each row.

Using the main colour, knit one round, then purl one round (this defines the fold line for the brim of your hat).

Knit two more rounds using the main colour.

Repeat Charts 1 as above. (You need to do two sections of Chart 1 to make both sides of the folded up brim the same -- that way you can wear the hat folded up and you'll have four layers of knitting over your ears, or with the brim folded down as a toque!)

Continue to follow the pattern charts 2, 3, 4 and 5, decreasing on rows as indicated for medium or large sizes. Go from your circular needle to your double pointed needles when necessary.

When you have completed the pattern, you will have 12 stitches left on your needles. Cut both of your yarns off at 18" length, and thread through the last 12 stitches -- pass your needle through a couple of times to hold the top of your hat closed, and leave the remainder of yarn hanging (for your tassel cord). I made my tassel by wrapping both yarns around my address book (which is about 4" tall) 50 wraps to make my tassel. I used the threads left at the top of the hat -- twisted and folded over twice to make my tassel cord -- forming the tassel over the cord and using a separate piece of yarn to secure the tassel. Use a sharp pointed needle to secure the yarns of both the tassel and your tassel cord. 

Take your invisible cast on, release your chain, and you will have live stitches to pick up.  Rip your knitting back until only two rows of background colour remain before the pattern starts. Using the smaller16" circular needle (and when necessary changing to the smaller double-pointed needles) knit the same number of rows (and decrease rows) as on the patterned hat, knitting your inner hat in the main colour. (If you have made your tassel already, you can use the remainder of your pattern colour to put stripes here and there for interest if you'd like.) Once you have finished the body of the hat -- the top of this inner had does not need to be shaped like the outside hat if you don't want to fiddle again -- just decrease one stitch every six stitches on alternate rounds until you have a small number of stitches left and seal the end using yarn and a sharp pointed needle!

Fold your hat on the purl fold line -- you can wear it this way as a toque, or fold up your heart brim and you've got a great hat to keep your ears warm!

Happy knitting!

Anne