Most knitted fabric lies relatively flat, with yarn choice and pattern embellishments such as cables or ribbing to create texture. But if you master the relatively extravagant loop stitch, you can use it to add textured loops instead of fringe on the ends of a scarf, or to create deep pile-textured washcloths, place mats and rugs. This stitch is best done in the English knitting method, holding the working end of the yarn in your right hand and "throwing" it around the needles to make a stitch. That "throw" makes it easy to tension the loop to the appropriate size in the front of your work.
Knit at least one row even to create a foundation for your loops.
Poke your right knitting needle through the first stitch on the left needle, as if to knit. Wrap the working end of the yarn counter-clockwise around the right needle and bring it down between the needles, then use your right needle to pull the yarn wrap you just made through the stitch on the left needle. You now have a loop of yarn on your right needle, plus the original stitch still on your left needle.
Bring the working end of the yarn to the front of the work between the two needles. Tension the yarn in front of your work by bringing it around the thumb of your left hand; this creates the loop part of the stitch. Return the working end of the yarn to the back of your work, again passing it between the two needles. You should still have the loop around your left thumb.
Insert your right-hand needle knitwise into the original stitch, which is still on the left-hand needle. Knit this stitch as usual: Wrap the yarn counterclockwise around the right needle, use the point of the right needle to bring that wrap toward you through the stitch on the left-hand needle, and let the original stitch slide off the left-hand needle.
Insert the point of your left-hand needle into the second stitch from the top on your right hand needle. Use the tip of the left needle to pass this stitch up and over the other stitch you just completed, and off the right-hand needle. The loop stitch technique creates an extra stitch on the right-hand needle; passing that stitch back over both returns you to the original stitch count and secures the loop you just made.
As a general rule, space loops at least one stitch apart within the row, and insert at least one row of normal knitting between each loop row. If you don't want your loops to line up in obvious columns, offset them by one stitch in each row. In other words, if you start row 10 with a pattern of loop, knit, loop, knit, you'd knit normally in row 11 and then start row 12 in the opposite order: knit, loop, knit, loop.