Blocking knitted items is an important part of finishing your knitting. In certain styles of knitting, such as lace, it will help to set the stitches and display the fabric to its best advantage. It will also help to smooth out the knitting and allow you to shape it which will make sewing up any pieces easier.
Many knitted items do need washing once completed. This may be in order to shrink the yarn to the correct tension, to clean the item and remove any sizing which may remain in the item from the factory processing. How you wash your garment will depend on the type of yarn it is - whether it's wool, cotton, linen or acrylic. Acrylic yarns can't take the high temperature you would use to wash linen yarns, and wool also needs some careful handling to avoid felting (unless of course you WANT it to felt!).
Once all the soap suds if any have been removed from the garment by means of thorough rinsing (three or four full basin fulls of water are usually enough) you can start blocking your knitting. I find it's best to lay out a large clean Terry towel on the floor (preferably a tiled or vinyl Kitchen or bathroom floor for obvious reasons) and after I've squeezed as much water as I can from the item I've made I lay it out flat on the towel. Then roll up the towel from one end to the other, incorporating the knitted item into it. You can then squeeze out most of the remaining water into the towel and your item will be ready to block out.
To block your knitting you will need rustless pins. You do NOT want to put pins into your knitting which may rust - think of how upset you will be if you find little rust spots all along the edges.
The knitting can be blocked on a clean surface of some kind into which pins can be inserted - a carpet or an ironing board usually works well. Be sure the carpet is well vacuumed and that you lay another clean towel or sheet on top of it where the knitting will be.
Now, make sure the knitting is laid out to the measurements you want, and insert pins all round the edges, about 1 inch apart, in order to hold it to that shape until dry. Remember that lace fabrics and some ribbed fabrics may need to be thoroughly stretched out for effect. You can use rulers and French curves (another kind of ruler in curved shapes which can be used to adjust curved edges accurately - usually available from art shops) and make sure pin lines are straight. If you have a decorative, pointy edge, you can thread a length of yarn through each point and put the pins against the yarn to hold it in place. Obviously each end of the yarn will need to be tied down firmly so that it does not come adrift till the knitting is dry. Now leave the knitting to dry thoroughly.
Once the knitting is dry you may want to steam it if the yarn permits. Put the knitting on the ironing board and hold your steam iron about an inch above it moving it gently back and forth.
This whole process takes time, but it will finish off your knitting and allow any textured stitches to show to their best advantage. You might even want to try blocking your tension swatch for practice purposes, to see how it behaves when washed, blocked and steamed. Then there will be no nasty surprises when you come to use your garment in everyday wear.Happy knitting!

