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The basic idea is to use a large hook and to crochet with three balls at once; this depends on the balls not all running out at the same time (since this is scrap yarn) so the colour-change is gradual.

A visual explanation for the Ten Stitch Blanket for Loom Knitters pattern found on Ravelry at http://www.ravelry.com/patterns/library/10-stitch-blanket-for-loom-knitters. This video explains how to work the corners and the join.

This pattern is a loom knit conversion of the popular Ten Stitch Blanket pattern by Frankie Brown.