I-Cord

Using the I-cord technique would work in any knit-in-the-round situation where you have less than 10 stitches – as in reducing stitches for a hat, or making strings, ties, or toy parts (dread locks, squid legs, etc).

To make I-cord place all stitches on one double-point needle, knit across all stitches. Instead of turning your work, simply slide the stitches all the way to the right end of the needle and continue knitting. It’s a little confusing at first because the yarn for the first stitch is attached to the opposite end of the work, but what you will find is that the yarn that is running from one end to the other is actually pulling the work into a stockinette stitch tube. Really cool.

This page has a video demo of how I-cord is made and also how you can apply it to an edge as a bind off (bonus!)
http://www.knittinghelp.com/videos/knitting-tips