From Wikipedia:
The handkerchief code (also known as the hanky code, the bandana code, and flagging) is a color-coded system, employed usually among the gay male casual-sex seekers or BDSM practitioners in the leather subculture in the United States, Canada, and Europe, to indicate preferred sexual fetishes, what kind of sex they are seeking, and whether they are a top/dominant or bottom/submissive. The hanky code was widely used in the 1970s by gay and bisexual men, and grew from there to include all genders and orientations.
Today, wearing color-coded handkerchiefs (bandanas), usually in the back pocket or around the belt loop, is the manner in which communication of desires and fetishes is achieved. Wearing a handkerchief on the left side of the body typically indicates one is a top, while wearing it on the right side of the body would indicate one is a bottom. This left-right reality is taken from the earlier practice of tops wearing their keys on the left belt loop and bottoms on the right to indicate being a member of the leather subculture. In the past bandanas might be worn tied around the neck (with the knot positioned on either the left or right side); around the ankle (when wearing boots or when undressed); or on other parts of the body.
The colors below are not exhaustive, but a good place to start.
