The Large Loop version of crocheting in the round involves crocheting a number of chains - usually determined by the pattern you are using - and joining the ends with a slip stitch. It's best to get in the habit of always slip stitching so the the chain remains untwisted. This will come in handy down the road when you are making clothing, socks, hats, etc.
So now you have your first big loop. Following this you have two options - crochet inside the loop, crochet in the stitches.
Crochet in the Stitches
When you crochet in the stitches your second row will have the exact number of stitches as your original circle. Several rows of the same number of stitches and you will form a tube useful in making the fingers of gloves or the body of a sweater. You could also add stitches to increase the size of your tube or to make the piece a flat circle.
To complete your circle, crochet in each chain around until you reach the first SC (single crochet) you made for this row.
If you try this at home you notice that my piece above lays more flat than yours. This is because I have added two single crochets (sc) to each stitch rather than one. To keep the piece flat through multiple rows, follow this quick trick:
Count the number of stitches in your first round and make sure each additional round has an additional number of stitches equal to the number of stitches in your first round. So if you used six (6) stitches to make your loop, your would add six stitches in the next round (2 sc in each stitch). For the following round you would add another 6 stitches. I like to space the stitches out to make sure I do not make my circle lop sided so I would add two sc (single crochet) to the first stitch, one sc to the second, two sc to the third, and so forth until I reached the end.
To start your next row you would chain one as your turning chain and sc in the same stitch as you slip stitched. Then sc around.
Crochet inside the Circle
Crocheting inside the circle will result in a very clean, tight circle. This is a great method for making napkin rings or other decorative items. You could make several of different sized loops and lay them on top of each other to make a flower. Or expand on a circle to make a snowflake Christmas ornament.
Here is your completed first row, notice how you cannot see any of the chain loop underneath. Slip stich (sl st) to the first sc to close to the circle.
To start your next row you would pull up a loop to act as the turning chain and sc in the same stitch as the slip stitch. In the below picture I sc in the back loops of the previous row's stitches only, notice how this adds a bit of detail. Remember to add additional stitches in each new row to keep the work looking flat or don't add additional stitches to make a tube.
Great! Now you know the small loop and large loop methods of crocheting in the round.
If you happen to try this pattern - post a picture of your work on my Facebook site: http://www.facebook.com/pages/CrochetByKarin/134647016599101