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A scalloped edging on a knitted item can be achieved by performing a picot bind-off. The picot, which comes from the French for "small point," provides a slightly stretchy edge with evenly spaced scallops. The size of the scallops can be made larger by picoting more stitches or smaller with fewer stitches. Larger picots will have a more curved appearance, while smaller picots will terminate in a point. You can shape the picots, however, to your liking when wet-blocking the item; tug the picots into the desired shape and allow them to set.
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Knit as desired to the end of your garment. For a two-stitch picot, cast on 2 stitches, then bind off 4 stitches. This leaves 1 stitch on your needle.
Slip this stitch onto the left-hand needle.
Cast on 2 stitches, bind off 4 and then slip the single stitch onto the left-hand needle.
Repeat casting on, binding off and slipping the stitch to the end of the row.
Draw yarn through the last stitch, clip yarn and tug the stitch firmly to close.
Weave in the ends using a yarn needle.
To increase or decrease the size of the picot, cast on the desired number of stitches and bind off twice as many.