This pattern assumes you can work in the round and know a little bit about knitting socks, but that you are not so set in your ways that you can't break the rules a bit :)
Size 7 double point needles or circulars
Gauge:
8" wide x 11" tall = 2"x2"
Top of the stocking:
Your needles are 1,2,3,4 in that order as you cast them on. You should have 15 sts on each needle and use a stitch marker to mark the beginning of your round if you like.
CO 60 sts and join in the round
Work 1" k1p1 ribbing
In stockinette stitch, work stripes that are 3 rounds tall each. To avoid jogging stripes, slip the first stitch of the new color when you come back around to it, and continue knitting around. You can find more details on tech knitting right here http://techknitting.blogspot.nl/2007/01/jogless-stripes.html?m=1
Work the leg of the stocking for 49 rounds. This means you will begin the heel after working 1 round of white in round 49.
Heel
Knit across needle 1 sts
The 30 sts on needle 2 & 3 will be your heel, ignore needles 1 and 4 for now.
With white, work 8 rows stockinette, slipping the first st of each round
Move all sts to one needle
(When slipping,
Slip first st, K14 k2tog k1 turn
Slip first st p4 p2tg p1 turn
Slip first st k5 k2tog k1 turn
Slip first st p6 p2tg p1 turn
Slip first st k7 k2tog k1 turn
Slip first st p8 p2tg p1 turn
Slip first st k9 k2tog k1 do not turn
You should now have 23 heel sts
(I know we didn't finish the heel here. It's ok.)
Now we are going back to working in the round.
Pick up 5 sts along each side of the heel flap as you knit one round even
Needle 3 is now needle 1 and the start of the round (it begins in the middle of the heel flap). Divide the heel flap and gusset stitches evenly onto 2 needles 16 on one and 17 on the other (doesn't matter which needle has more, in my uneducated opinion)
K across needle 1 until 3 sts left, then k2 tog, k. K across needles 2 and 3, k1 ssk, knit across needle 4.
K around
Repeat these 2 rounds three more times
Knit even for 15 rounds
Now for the toe decreases:
Knit across needle 1 until there are 3 sts left. K2tog, k, ssk next sts, knit across needle 2 and then needle 3 until there are 2 sts left on needle 3. K2tog, k1, ssk and k across needle 4
Knit even
Repeat these toe decreases 6 more time or until you have a nice rounded toe. Trim your yarn leaving a long tail, then use this tail to cinch up the toe by threading it through all of the stitches and pulling tight. Knot it and weave in all ends.
For the loop, you can use fabric, an I cord, or a crocheted piece to stitch onto the inside. I crocheted a piece for the loop by chaining 24, and then sc two rows.
Finishing:
If you are using acrylic yarn, I recommend "killing" it for nice drape and shine. This means you will pin it out how you want it, cover it with a clean wet towel, and press the wet towel with a hot iron. Iron in short spurts because you don't want it to melt the yarn completely, just a bit. This will make that yarn really open up and be the shape you want it to be.
