Create New Folder Option

Sorry for a simple question. Can't seem to find the answer in "search."
When I create a new folder, it always defaults to the root directory and I must drag and drop it to the directory I want it in, essentially creating a sub directory. I imagine I'm missing something here and should be able to create a new folder in any directory/sub directory I need, correct?
Thanks in advance!

Open a finder window, select: view > customize toolbar, a sub window with a
set of buttons appears. Point to each button to see an explanation of what it does. You can do any of the following:
Add a button: Drag it to the toolbar.
#add the new folder button to the toolbar, now you may create a new folder at will in whatever
folder you are viewing at the time.#
Add space between buttons: Drag Separator, Space, or Flexible Space to the toolbar.
Return to default toolbar: Drag the default set to the toolbar.
After making modifications click "Done"
Kj

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