I always dowse by holding the chain between thumb and finger of my right hand (some say it should be the left as left = intuitive side), and rest my elbow on a flat surface. I begin by asking the pendulum if it can help me. There are three main ways I use a pendulum: for yes/no questions; to choose between things and with more complex pendulum dowsing diagrams.
Yes/no questionsThis is clearly the easiest way to use a pendulum. Some books/people will tell you that a certain way means yes and another no, but I find it easiest to ask the pendulum "show me yes" etc.. I first dowsed this way without reading instructions and 'my' way for yes and no isn't what the books say. I get side to side for yes, front and back for no and round for 'not telling/don't know/you shouldn't be asking that'. It is also possible to gauge the strength of the answer from the range of movement - it really does swing more strongly and definitively for some answers than for others.
Choosing between thingsI've used this for things like "which tarot deck would help me most for this question" or "which aromatherapy oil do I need most right now", and I simply lay the things out and hold the pendulum in the middle. Although it seems like it would have to swing back as far as it swings out, and therefore indicate two things, this is invariably not what happens. I've seen many people amazed that it will seem to swing out a long way one side and then barely pass the middle point to go in the other direction.You can use this for choosing between two things, placed left and right to the pendulum, or you can lay several around it in a circular pattern. You can also dowse over each of several things with "should I use this?" or a similar question and go with the one with the largest positive answer. I've also done something like this for essential oils - selected three or four to make a blend, and then dowsed for how many drops of each (using a diagram as below). Inevitably, this results in a blend which also treats something I wouldn't have thought to include otherwise (e.g. a 'help me concentrate and work' blend with anti-anxiety oils in it).
Dowsing diagramsYears ago, I bought a book called "The Pendulum Workbook" (now sadly out of print) which is full of complex diagrams to be dowsed over to select things. The basic principle revolves around circles. Imagine you wanted a complementary therapy for a condition, but you don't know which to choose. Draw a circle and around the edge list the possibilities (homeopathy, aromatherapy etc etc - depending on what's appropriate and available to you). Then you hold the pendulum over the very centre of the circle and ask it to indicate what you should choose, and it will swing out to the right choice. Again, you would expect it to not be able to avoid indicating two things which are positioned opposite one another on the circle, since you begin in the middle, but again - amazingly - this is not what happens.
Another diagram that I learnt to use with a pendulum diagnoses the flow of energy in a person's chakras. You draw a simple (stick figure if need be!) outline of a person and put a dot at each chakra position. Then hold the pendulum over each spot in turn and draw onto the diagram what the pendulum did at each point. A closed or very low energy chakra will result in no movement, one that's just opening (or closing) will give you a diagonal oval and an open chakra gives you a circle. It's worth recording which direction round the pendulum went (they should alternate between clockwise and counter-clockwise). Further questions can be asked to find out whether a certain chakra is opening or closing, why there's a problem at a certain point etc, using yes/no questions or setting up another diagram if you have several possibilities to explore.