Add a custom Favicon from the Design | Page Elements tab (or, from the Layout tab if you're using the new user interface), by clicking Edit on the new “Favicon” settings above the navbar element.
When you click Edit a new window will then open where you and select the image from your hard drive and it supports only .ico files, so to convert your JPEG, PNG or other non ico image file use any software. You can find many conversion tools online like http://www.icoconverter.com/.
Once you have selected the .ico file for your Favicon click Save.
And then save the template changes, your newly added Favicon will be displayed in your browser.