A Loop Cut is defined as splitting a loop of adjacent faces down the middle. If that doesn’t make sense, let me demonstrate with our trusty cube. I have selected a closed-loop of faces – the left, top, right and bottom faces. The face at the back and the one nearest us are not selected. The other four that are selected are adjacent (sharing an edge) to one another and form a loop :
Now start the Loop Cut tool by typing 
. (It doesn’t matter whether the loop is selected or not)
Move the cursor close to a face, and a yellow ring will appear, indicating where the loop of faces will be cut in two. Move the cursor to the point shown, the new looped ring of edges will appear:
Left-click 
and nothing seems to happen until you move the mouse. With the mouse moving, you can now define where the new loop will appear by left-clicking . If you want the Loop Cut to be precisely in the middle, press 
first and then left-click to lock in its position and complete the operation:
If you try the procedure again you can put another loop cut either “behind” the first Loop Cut or “in front” of it:
For more info on Loop Cuts, here is a link to the Blender Manual
There’s always a Potential Problem!
Sometimes a Loop Cut appears not to work or only partially. Let’s bevel (click here to read about bevelling) the vertical edge of the cube nearest to us:
Now let’s add a loop cut on the front half of the Cube:
And we see that the loop refuses to run right around the cube. Blender can only give us a single edge when we click in the vicinity of the white cross. Why won’t it go around in a loop? This problem annoys many modellers, especially if they don’t understand what is going on. There is a basic rule with loop cuts. “A loop cut can only travel through quads”. The moment the loop cut tool encounters either an Ngon or a Triangular face, it stops. So look carefully at the cube here:
So, if your Loop Cut doesn’t want to make a complete loop, look for an Ngon or a Tri blocking its path.