japanese prayer flag

picture is of flag with red circle in middle, japanese writing on one side, and signatures in japanese around the circle. Does it hang horizontally or vertically? How would one read the japanese characters?

got a picture?

A flag with a red circle in the middle sounds like the Japanese national flag, if the background is white. Are you sure it's a prayer flag? Where was it?

Sounds like one of those flags presented to people heading off to war and signed by family and friends.
If so, I don't think there is any "right way up", since the flag is not really intended to be hung up or flown. If the original poster can upload a photo of it on the web somewhere, maybe someone here can translate some of the names or messages, but from past experience, the cursive handwriting on these flags is usually pretty hard to read.

http://www.rose.sannet.ne.jp/nishiha/iryuhin/index.htm

If it looks like something in the above photos, I _guess_ you can call it a "prayer flag" because the writings are usually relatives' and close ones' prayers hoping that the soldier will come home safely. But since you have the flag, he probably did not. Still, I'm sure the war bereaved will be happy to have it back as a precious memory.

Click "English Version" in the above site for more details.