To use a pendulum, you hold the free end of the string lightly in your dominant hand while concentrating on the question at hand. The pendulum will either move in a circle or a straight line, depending on the answer.
When first beginning work with a pendulum, the first questions you should ask are: "What is your movement for "yes" answers? What is your movement for a "no" answer? The pendulum also usually has a third, random type motion that it makes if the answer cannot yet be determined.
Not only is the pendulum a dandy form of divination, but it also works to refine the connection between mind and body. Barely discernable muscle movements actually cause the pendulum to move, even when you're trying to keep your hand as steady as possible. This is the subconscious, intuitive part of your brain working directly to supply the information you need via the pendulum. Because of this, it's also an excellent exercise if you are interested in increasing your intuitive, extra-sensory perceptions.
Here's a photo of my pendulum.
~Flame RavenHawk