Translate Magento in Frontend

You can use built in translation methods and define all your strings in templates like this:

<?php echo $this->__('yourtext'); ?>

if you need to use strings in classes or blocks you can get the context from helper class like this:

<?php echo Mage::helper('yourextension')->__('yourtext');?>

and if you need to define your own translation file then use this in your etc/config.xml

<config>
    <frontend>
        <translate>
            <modules>
                <Your_Extension>
                    <files>
                        <default>translation.csv</default>
                    </files>
                </Your_Extension>
            </modules>
        </translate>
    </frontend>
</config>

Put your translation is app/locale/language_CODE/translation.csv