Step 1: Supplies
A white paper clip
White plastic lace (Rexlace an Creatology are good brands)
Red plastic lace (plastic lace can usually be found at Michaels craft supplies stores)
Step 2: Preparing the Candy Cane
Step 3: Starting the Candy Cane
If what you have just read was a bit confusing there is an image that helps illustrate the instructions.
Step 4: Finishing
The loop (the part for hanging it on a christmas tree) was made be weaving an extra piece of plastic lace through one of the knots and then tying the loose ends together.