A folktale is a story that has been passed down through the generations. Many of them started out as oral stories - tales that were transmitted via word of mouth - and were written down later. Myths, legends, fairy tales and fables represent types of folktales. They normally teach a moral lesson or rationalize world events or phenomena that couldn't otherwise be explained at the time of the tale's origin, such as how the world came to exist. An author can write a story in the style of a folktale by following its conventions.
Study examples of folktales and choose a narrative form. Folktales are a wide-ranging genre, so you can write one in the style of a fairy tale, a Greek or Roman myth, a local legend or an urban myth.
Decide on a moral or message for your story. It could be a simple moral, such as "treat others as you wish to be treated," or something more contemporary or complex, such as a lesson about the hazards of climate change.
Develop your characters. You will need a main character and several supporting characters. Your main character could be good and brave, or he could have negative traits which change by the end of the story after he learns his lesson.
Plan your storyline. A good plot for a folktale needs a clear and attention-grabbing beginning, a middle that builds up suspense and a satisfying ending. The plot should include a conflict or problem and a resolution to the problem.
Write in an informal, colloquial style. This style is characteristic of a folktale and will help give the story the right tone.
Note
Try to make your story's dialogue convincing. Bad or unrealistic dialogue can ruin an otherwise well-written story.