help needed with knitting pattern

Hi all,
I’m new to circular knitting and am trying to follow these instructions : http://knitted-patterns.com/knitting-for-children/knitting-for-girls/4408-knitted-dress-for-premature-babies
But for me these instructions are very confusing.
Where and how the diagram is applied by following these instructions: Apply the diagram 4 times for increase onto those stitches worked as yarn over 1, knit 1, yarn over 1 to obtain 246 stitches. When body length is 9 cm, work 51 stitches formed for sleeves as garter stitch for 1 cm, and cast them off at once to finish. Work the remaining 144 stitches for 2 cm as knit stitch. Starting from the next row, set up the stitches as purl 3, yarn over 1, knit 1, yarn over 1, purl 3, yarn over 1, knit 1, yarn over 1 and so on. Work the stitches on the reverse side as they are.
Please any help would be highly appreciated. Thanks a lot!

That seems to be written in a very convoluted way but here’s what works.
You’ve already worked row 3 of the pattern when you worked the yarn over, k1, yarn over. Now you’re going to continue at that stitch pattern with the chart.
On the next chart row, row 5, yarn over, purl 3, yarn over. This is centered over the yo, k1, yo on row 3. Follow the chart to up to row 11, work row 12 (I assume the even rows are purl rows.) and then start row 3 of the chart again.
Each repeat of rows 3-12 will give you an increase of 40sts. Repeated 4 times is 160 sts. That plus the 86 to start is 246.

Thanks a lot for your reply. Im still a bit lost (sorry about being so dumb :frowning: )
so i did cast on 86 stitches then
row 1: knit all
row 2: purl
row 3: garter 6, knit12, yo, k1, yo, k11, yo,k1,yo ,k24, yo,k1,yo,k11,yo,k1,yo,k12 ,garter 6 {94 sts}
row 4 : purl
row 5: here i just dont understand where to add yo,p3,yo… Can you give me a sample line (like row 3) because i didnt get what will be before and after yo,p3,yo.
Im so sorry for asking dumb questions. Its my first time with circular knitting and knitting charts.

Thanks a lot!

You’re doing very well with a pattern that’s not at all easy. Writing out row 3 is very helpful and makes it much easier to follow the pattern. So for Row 5:
garter 6, knit12, yo, k3, yo, k11, yo,k3,yo ,k24, yo,k3,yo,k11,yo,k3,yo,k12 ,garter 6 {94 sts}
The yarn overs from row 3 will give you the extra sts for the k3 in row 5.
Row 7: row 3: garter 6, knit12, yo, k5, yo, k11, yo,k5,yo ,k24, yo,k5,yo,k11,yo,k5,yo,k12 ,garter 6 {94 sts}

I would think that this little dress should be open at the back of the bodice so that it’s easy to put on? What about working the top knit back and forth and then joining in the round for the skirt? In that case, you want to keep the sts between the yarn overs as garter stitch according to the chart and photo.