Make sure your last row was a wrong side row. Leave your stitches on their needle. Now, let's examine the cast on edge. With the right (knit)side facing, push back that little chain of waste yarn. You can see the live stitches peeking out:
Take a double pointed or circular needle, and insert the tip
through the right leg of each stitch.
When you have picked up each stitch, you should have something that looks like this:
Pull this end of the waste yarn out of the chain, thus:
Your cast on edge, with it's one less stitch:
Since this post is so photo heavy, let's tackle that graft behind the jump...
Fold your piece in half with the wrong sides together and line up your needles with the ending edge (that's the needle with one more stitch) facing you.
Step 1: Go through the first stitch on the front needle again, this time knitwise, and slip the stitch off the needle. Go through the next stitch on the front needle purlwise, and leave on the needle.
Step 2: Go through the first stitch on the back needle again, this time purlwise, and slip the stitch off the needle. Go through the next stitch on the back needle knitwise, and leave on needle.
Repeat Step 1 & 2 until you have two unworked stitches on the needle closest you (you'll be in the middle of Step 1). Time to trick those pesky knitting physics. Thread the needle purlwise through both stitches, and leave them on the needle.
Now it's perfect!
Next time, I'll go over using a provisional cast on in combination with a garter tab, as used by so many beautiful shawl patterns. See you then!