Creepy cute magic circle

[cpt_babypants]

I am trying to make a friend the Ninja from the Creepy Cute and I can't seem to get started. I'm not understanding the directions from the book. Do I work the stitches into the loop and is it a single stand or double strand? I can't seem to get it to work.

EDIT: Thanks to everyone for responding so quickly. I've got it down now :)